G10 Taylor Rule methodology

Formula

r = r* + π + 0.5(π − π*) + 0.5(y − y*)

• r — prescribed nominal policy rate
• r* — neutral real rate (country-specific, typically 1–2%)
• π — CPI inflation, year-over-year
• π* — inflation target (2% for most G10)
• y − y* — output gap

Output gap

• United States: CBO potential GDP (FRED GDPPOT)
• All others: HP filter (λ = 1600) on log real GDP

How to read the gap

• Gap > 0: implied rate above actual — policy looser than the rule
• Gap < 0: actual above implied — policy tighter than the rule
• Within ±0.5pp: broadly aligned

Live monitor: /taylor. API: GET /api/v1/taylor/data. We do not compete with the Cleveland Fed’s US Taylor series — we cite FRED and show the G10 overlay.

Open-data dump of the archive: /open-data.