WAS THE INTEREST RATE POLICY OF THE ECB TOO LOOSE? INSIGHT FROM A SIMPLE TAYLOR RULE

The interest setting of a central bank can be explained using rule-based monetary policy. A rulebased policy framework considers major economic variables to make recommended rate. In an economy, the fluctuations in are vital indicators that signal action from bank. this paper, we scrutinize short-term rate European Central Bank (ECB) based on observed conditions. We have our analysis simple Taylor rule. investigation includes evidence and implication selected time period reflect practice followed. For comparison purposes, applicability validity then analyzed for US relying Federal Reserve. Our empirical findings confirm adjustments two banks go along with recommendations Finally, taking difference between settings banks, is made identify whether attributed rule recommendations.