2  -2Taylor (1999) rule--the output gap and the deviation of inflation from target--can be thought of as capturing the influence of the drivers of monetary policy at business cycle frequencies, with the longer-lasting (lower-frequency) determinants of the level of the policy rate being subsumed into movements in r*.
The output gap, which represents the utilization of capital and labor, exceeded the long-term average of 0 percent in the second half of 2016, and since then has continued to widen further in positive territory (Chart 2).