But if the economy instead began to overheat, threatening to push inflation to an undesirably high level, the FOMC would have ample scope to respond through tighter monetary policy. Such asymmetric risks arguably call for a more gradual path of rate increases than indicated by the prescriptions of a simple policy rule.
The academic literature on policy rules has studied many alternatives to the Taylor rule, and the FOMC regularly reviews a number of them. 18 These rules embed differing but valuable perspectives, and there is no consensus among central bankers or academics about the relative utility of various rules.