INTERDEPENDENCE OF THE KEY RATE AND INFLATION(METHODOLOGICAL ASPECT)

The research subject is the analysis of the interdependence of the key interest rate and the inflation
level. The comparison of theories which replace one another and in a certain sense compete,
being considered as simple macroeconomic models, and the practice of current monetary policy, i.e.
2020, amidst a pandemic, calls the previous theoretical developments into question. The article examines
the interdependence of the interest rate and the inflation rate of Irving Fisher and John Taylor,
the feature of the multi-factor economy of the early XX century, and the behavior of the key
rate and the inflation in the current situation.
Employment, inflation, and interest rates are the main goals of monetary policy but their
significance is changing. The authors deal with the issues related to compliance of the Fisher rule in
developing countries and the Taylor rule in developed countries, and the issue of lowering the nominal
interest rate to zero is addressed.