Inflation forecast targeting has the advantage of being explicitly forward-looking. The Taylor Rule, in contrast, appears to be backward-looking, though the contrast is not as clear in practice as it might  3  BIS Review 110/1999  appear. Forecasts are exercises in processing information about current and past developments to yield anticipated future outcomes.
The Taylor Rule takes explicit account of only very recent observations on inflation and output, but these are, to be sure, important determinants of future inflation. An inflation forecast approach allows policymakers to consider a wider range of current and past information in projecting future outcomes.