Some of the variables relevant in this regard are: 1) the level of unemployment and the rate of job creation; 2) the rate of change in wages or prices or early signs of emerging inflation; 3) the rate and composition of GDP growth (inventory, trade flows, consumption, investment, residential and commercial construction, etc. ); and 4) international developments.
Economists refer to these variables as being from the “real” side of the economy. Another set of variables to be considered in making monetary policy are financial variables, such as money supply, interest rates, exchange rates, credit flows and conditions in bank lending or in the debt and equity markets.