GDP deflator
In this equation, formula_2 is the target short-term nominal interest rate (e.g. the federal funds rate in the US, the Bank of England base rate in the UK), formula_3 is the rate of inflation as measured by the GDP deflator, formula_4 is the desired rate of inflation, formula_5 is the assumed equilibrium real interest rate, formula_6 is the logarithm of real GDP, and formula_7 is the logarithm of potential output, as determined by a linear trend.