A simple policy rule points to a slow and shallow easing cycle in the US, gradual rate cuts in the euro area, and risks around the RBA's conscious decision to raise rates by less than other countries in order to lock in the employment gains of the past few years. CCI uses a version of the Taylor rule to assess the risks around central bank forecasts for the policy interest rate in the US, euro area, and Australia. A Taylor rule estimates policy rates based on central bank forecasts for underlying inflation and inflation relative to their respective inflation targets and estimated NAIRUs. The rule’s estimates are ... (full story)