Core inflation as an indicator in monetary policy rules

In an inflation-targeting regime, future inflation is the final target, but current inflation is a determinant of future inflation and thus can be used as one of a set of indicators to suggest whether policy should be tightened or loosened now in order to achieve the final target in the future. This is explicit in a Taylor rule, which specifies the monetary policy reaction as a function, in part, of the deviation of current inflation from its target.