ECB and Fed Interest Rates Aligned with Simple Rule, Impact Revealed.
The European Central Bank's interest rate policy was analyzed using a simple rule called the Taylor rule. This rule considers economic factors to recommend an appropriate interest rate. The study found that the ECB's interest rate adjustments align with the Taylor rule's recommendations. A comparison with the US Federal Reserve showed similar results. The difference in interest rate settings between the two banks was examined, revealing that it can be attributed to variations in the Taylor rule recommendations.