Inflation rate vs Monetary policy

[zxfmontreal]

2015 exam morning session, Economics
The optimal inflation rate calculated from Taylor’s Rule = 2.35% and the current inflation rate is 2.50%. Why the monetary policy should be loosen?
If the optimal rate is below the current rate, then the central bank should reduce the current inflation rate by reducing the money supply, no? Wouldn’t loosening the monetary policy make the inflation even higher?

 

[S2000magician]

I don’t have access to the 2015 morning session, so I cannot look at the actual exam questions and answers.
The Taylor rule calculates the optimal Fed funds rate, not the optimal inflation rate.
Without more details, I cannot help with your question, unfortunately.

 

[gad4]

If you reduce interest rates, then people will borrow more and there will be more money in circulation