The Taylor Rule is a formula that puts Fed interest rate decisions on autopilot : The Indicator from Planet Money Today the Fed raised interest rates to just under 4%. The Taylor Rule says this should have happened a year ago. We talk to John Taylor about letting a formula do the work instead.

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John Taylor's formula for the Fed

John Taylor's formula for the Fed

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Kevin Dietsch/Getty Images
Renovations continue on the Marriner S. Eccles Federal Reserve Board Building on September 19, 2022 in Washington, DC.
Kevin Dietsch/Getty Images

It's a classic case of human vs. machine. Eight times a year, the Federal Open Market Committee convenes and spends two long days deciding on a target interest rate to keep inflation low and jobs high.

But what if an equation most econ students learn in their first college semester could do all the work for them, and maybe even do a better job?

We speak with Stanford economist John Taylor, the creator of the eponymous Taylor Rule, about putting interest rates on permanent autopilot.

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For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org.