Current Central Bank Rates vs. Taylor Rule Targets and 4-Quarter Forward Projections

Taylor (1993) Benchmark: $$i_{c,t}^{*, \text{Taylor}} = r^* + \pi_c^* + 1.5(\pi_{c,t} - \pi_c^*) + 0.5 x_{c,t}$$ [Uniform parameters across all countries: \(\phi_\pi = 1.5\), \(\phi_x = 0.5\); controlled by the \(r^*\) slider]
Country-Specific Smoothing Rule: $$i_{c,t}^* = r^* + \pi_c^* + \phi_{\pi, c} (\pi_{c,t} - \pi_c^*) + \phi_{x, c} x_{c,t} \quad \implies \quad i_{c,t} = \rho_c i_{c,t-1} + (1 - \rho_c) i_{c,t}^*$$ [Country-specific reaction \(\phi_{\pi, c}\), \(\phi_{x, c}\) & smoothing persistence \(\rho_c\) estimated via Bayesian MCMC, adjustable below]
Forward 4-Quarter Horizon: $$i_{c, t+4} = \rho_c^4 i_{c,t} + (1 - \rho_c^4) i_{c,t}^*$$ [Unchanged macroeconomic environment projection \(t+4\)]
Country (Central Bank) Official Policy Rate Taylor (1993) Smoothing Taylor rule Smoothing Taylor rule +4Q
(Unchanged Macro)		 Policy Stance vs. +4Q Projection
Czechia (CNB)
YoY Inflation: 2.1% (Target: 2.0%%) | Output Gap: +0.49%
3.75% 3.40% 3.58% 3.73% Aligned (+0.02 pp)
Hungary (MNB)
YoY Inflation: 1.7% (Target: 3.0%%) | Output Gap: -0.06%
5.75% 2.02% 6.06% 5.13% Restrictive (+0.62 pp)
Poland (NBP)
YoY Inflation: 3.0% (Target: 2.5%%) | Output Gap: +0.37%
3.75% 4.43% 3.78% 3.86% Aligned (-0.11 pp)
Romania (BNR)
YoY Inflation: 5.2% (Target: 2.5%%) | Output Gap: -2.36%
6.50% 6.37% 6.30% 5.93% Restrictive (+0.57 pp)
Assumed natural rate range: 0.0% – 2.0%. Modifies Column 3 [Taylor (1993)] across all countries in real time.
0.0% 2.0%
Interactive Country Policy Sliders & Counterfactual Simulator
Select a country to test hypothetical policy behavior (e.g. what if NBP acted like CNB?) or adjust reaction elasticities manually.
1. Select Economy to Simulate:
2. Counterfactual Presets (Click to Apply):
1.0 2.0
0.0 1.0
0.70 0.99
Select Central Bank / Economy:
Single selection synchronously updates all three time-series charts below.

Central Bank Policy Rates vs. Taylor Rule Targets (2010–2026)
Quarterly annualized rates: Official policy rate \(i_t\) vs. ex-post real rate \(r_t = i_t - \pi_t\), unsmoothed Taylor target \(i_t^*\), and interest rate smoothing path \(i_t^{\text{impl}}\).

Standard Taylor (1993) Rule: Policy Gap & Macroeconomic Contributions
Combo chart: Solid line shows Taylor (1993) policy gap \(\text{Gap}_t = i_t - i_t^{*, \text{Taylor}}\). Stacked columns display macroeconomic contributions from inflation deviation \(1.5(\pi_t - \pi^*)\) and output gap \(0.5 x_t\).

Country-Specific Rule (Unsmoothed Target): Target Gap & Reaction Contributions
Combo chart: Solid line shows target gap \(\text{Gap}_t^* = i_t - i_t^*\) relative to the unsmoothed Bayesian target \(i_t^*\). Stacked columns display country reaction contributions: inflation \(\phi_{\pi, c}(\pi_t - \pi^*)\) and output gap \(\phi_{x, c} x_t\).