A simple three-parameter monetary policy rule is very effective at stabilizing the economy by minimizing fluctuations in inflation, output, and interest rates. More complex rules do not significantly improve outcomes. Efficient policies smooth interest rate responses to shocks and use feedback from anticipated actions to stabilize inflation and output. Targeting the price level instead of the inflation rate has only small additional costs. These findings hold true even with uncertainty and constraints on interest rates. However, if expectations are not influenced by policy, the effectiveness of efficient policies may decrease.