Furthermore, the Fed would like to adhere to the so - called «Taylor Rule» (in spite of Professor Taylor's protestations that it is misinterpreting and misusing his concept), a mathematical construct that purports to make monetary policy more «scientific» by establishing an arithmetic rule for varying the administered interest rate according to the variance of «
actual from target inflation» (note that «inflation» refers to the change in a price index in this case, not the phenomenon of inflation of the
money supply as such), as well as the variance of economic
output from «potential
output» (i.e, the so - called «
output gap» is incorporated in the formula as well).