For example, let us assume that growth ultimately moves to trend but, in the interim, the continued above-trend growth increases the output gap still further. In response, policy should tighten incrementally, encouraging below trend-growth and hence unwinding the further increase in the output gap.
The strategy I have described would reduce the prospects of policy responding to noise is estimates of key real-side variables in the economy and would increase the prospects of allowing the economy to realize the full benefits of the recent improvements in aggregate supply.