Interest Rates Should be Closer to 10%

Correct! - The Fed’s mandate is to achieve stable prices, which means keeping the inflation rate low, and to achieve maximum employment, which means keeping the unemployment rate close to the natural unemployment rate to attain the maximum sustainable growth rate of real GDP.

Good Job! - The Taylor Rule sets the federal funds rate at 2 percent a year plus the inflation rate plus one half of the deviation of inflation from 2 percent a year, plus one half of the output gap. In May 2022, the Taylor Rule would set the federal funds rate at 13 percent a year.