The proposal by Walsh (2003) that policy should include a speed limit by having the change in the output gap as an additional term in a Taylor-type rule is shown to be exactly optimal given an appropriate parameterization.

Recently the idea that business cycles can be driven purely by anticipated developments in the economy—so-called news shocks—has been usefully revived. In this note news shocks are investigated in the context of monetary policy rules designed to mitigate their effects.