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Taylor Proposes Altering Fed Law to Require Rate-Setting Rule

The Federal Reserve would be required to have a “systematic” rule for adjusting interest rates under a proposal raised today by Stanford University Professor John Taylor, a critic of the Fed’s monetary stimulus.

The Federal Reserve Act should be amended so the central bank has to tell Congress twice a year about its strategy for the “systematic adjustment of the federal funds rate in response to changes in inflation and in the real economy during the current year and future years,” Taylor, author of a formula used by the Fed for setting central bank interest rates, said in a speech in Washington.