The Taylor Rule is a formula that links the central bank discount rate to inflation and economic growth.
Developed by economist John Taylor in 1993, it assumes that the equilibrium federal funds rate is 2% above the annual rate of inflation.
The Taylor Rule adjusts the equilibrium rate based on the deviation of inflation and real GDP growth from central bank targets.
Exceeding inflation and growth targets raises the discount rate in accordance with the Taylor rule, while a deficit lowers it.
The basic Taylor rule formula does not take into account the ineffectiveness of negative interest rates or alternative monetary policy instruments such as asset purchases.
The Taylor rule formula makes inflation the most important factor in setting rates, while the Federal Reserve has a dual mandate to ensure price stability and maximum employment.
The float is essentially money with a double account: the amount paid, which, due to delays in processing, appears simultaneously in the accounts of the payer and the payee.
The CC Regulation implements the 1987 Expedited Funds Act, which establishes requirements that banks must provide deposited funds in accordance with established schedules.