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A number of variations can be formed of the Taylor rule, all of which are simplifications. Monetary policy decisions cannot, however, be taken solely on the basis of simple rules.

How would a rapid but controlled restructuring of China’s economy or a sudden halt to debt-driven growth affect the Chinese and euro area economies?

The US economy has recovered from the financial crisis. Beginning in October, the Fed will reduce the holdings of securities on its balance sheet that it had purchased in its securities purchase programmes.

The global economy is experiencing brisk, broadly based growth in the current year. World trade is undergoing a growth spurt. At the same time, inflation remains sluggish.

The euro area economy is growing, supported by monetary policy. Confidence in the economy is strong, and investment and employment are both growing. On the other hand, there still remain problems from the financial and debt crises, and the pace of structural reform has slowed.