Ever since, scholars have been tweaking coefficients, modifying variables and debating its function, but Taylor's rule has remained the gold standard, so to speak—open to doubt and subject to discretion, but impossible to dismiss. “A simple equation that has proved remarkably useful as a rule-of-thumb description of monetary policy,” wrote now-Fed Chairman Ben Bernanke in 2004. Or as Taylor observes in the following Region interview, “Staying close to the rule works pretty well.”

"All monetary policymakers now understand what the academics call "Taylor's Rule" (due to John Taylor) -- when inflation increases and market interest rates rise with that inflation, the central bank must increase its target rate by more than the increase in market yields -- else, the central bank is just keeping abreast of the market and not leaning against the inflation. If such a rule is approximately correct, then it should also moderate the growth of the base and reserves (which of course are feeding the inflation). It would be a useful task to build such an empirical model and demonstrate how the process works, but I'm not aware of anyone doing so..."

Richard G. Anderson - the world's foremost authority on the monetary base and legal reserves