A monetary rule that summarizes the behaviour of a central bank which adjusts the interest rate (say, r) in response to a deviation of the inflation rate (π‎) or the output gap (y) from their target values. The original equation, proposed by John Taylor, had the form $r\text{}=\text{}\pi +\text{}0.5y\text{}+\text{}0.5(\pi -\text{}2)\text{}+\text{}2$ so that the target inflation rate is 2 per cent and the target output gap is zero. See also monetary policy.