Question

Go to http://www.federalreserve.gov/fomc/. Read the latest FOMC statement and the minutes of the most recent FOMC meeting. Are the statement and the discussion in the minutes consistent with the Taylor principle?

Short answer

No, they are not consistent.

Step-by-step solution

Concept Preface 

FOMC stands for Federal Open Market Committee, and it is in charge of monetary policy, particularly price stability and long-term economic growth. The Taylor rule is used by the FOMC to achieve its objectives. To maintain prices steady, the Fed should raise interest rates more than the rate of inflation, according to Taylor's principle. That is the major task of the FOMC, and they aim to adhere to the Taylor rule.

FOMC statement 

The latest FOMC meeting was on 15 March 2022 and continued on 16 March. The discussion in this meeting was focused on the effects Russian invasion on the global economy, and the impact of sanctions on Russia on the financial market in the US.

The committee expected the inflation rate to reach its long-term target of 2%. The committee has decided to increase the target federal funds rate to 1/4 to 1/2 percent. This is not consistent with the Taylor principle which recommends the nominal interest rate to be increased higher than point-to-point for inflation.

Step :3  Inflation and maximum 

Taylor's principle is a tool developed by economist John Taylor. It was designed to give "recommendations" for how a central bank like the Federal Reserve should set short-term interest rates as profitable conditions change to achieve both its short-run thing for stabilizing the frugality and its long-run thing for affectation.