This family of rules provides a direct way to input any interest rate path in the model. This
is useful to analyze the consequences of an expected interest rate trajectory, such as that implied
by financial market instruments or the implicit path considered in the government budget.
A particular rule of this family can be very helpful for institutional communication. The
quarterly Inflation Report traditionally presents inflation and output growth forecasts constructed
under the assumption that the short-term interest rate will remain constant at the current level
along the projection period. This projection is made clear by means of an inflation fan chart,
which shows the probability distribution around the central forecast for each quarter. By visual
inspection, it is possible to infer whether monetary policy should be altered and in which
direction.