Rate Howl
You are Jerome Howl, Chair of the Federal Reserve of the Pack. Each month something happens. Raise, cut or hold the policy rate by 0.25 points, then watch inflation, unemployment, the market and the pack's mood react. Rates work with a lag: the economy feels a slower felt rate that catches up with the rate you set, so a move made today keeps arriving for months, and a hold is still a decision. Survive 12 months without letting inflation escape, breaking the economy or causing market chaos. Aim: inflation near 2%, unemployment near 4.5%, market near 100.
Result
The model's assumptions (model version 2)
A deliberately simple model, not a forecast. Neutral real rate 1%; the economy's natural unemployment rate 4.5%; inflation target 2%. Transmission lag: the economy does not feel the rate you set at once. It feels a felt rate that closes 40% of the gap to the set rate each month, so a move is 40% felt in its own month, 64% after two months and 78% after three. A month in this game is a game turn: the 40% is an assumption chosen for play, not a measured real-world lag. Policy stance = the felt rate minus (inflation + 1). Each month inflation changes by −0.25 × stance + 0.1 × (4.5 − unemployment) + 0.2 × (2 − inflation) + the shock, and unemployment by +0.3 × stance + 0.25 × (4.5 − unemployment) + the shock (kept between 2% and 15%). Markets react to the move itself on the day, and to the felt stance. The uncertainty range assumes policy 25% weaker or stronger and a pipeline that empties at 25% to 60% a month. Version 1 (2026-10-19) had no lag; run links made before version 2 replay on version 1. The shocks are invented and the wolf is fictional: nothing here describes a real central bank's actions or words.
Decision log
The model is deliberately simple: higher rates cool demand, lower unemployment-driven price pressure and dampen markets, with supply shocks pushing prices regardless. Real central banks weigh far more. After every decision the game splits the change into its channels (your policy stance against a neutral rate, labour-market slack, the pull back toward target, the shock), shows what is still in the pipeline from earlier moves, and shows what the other two moves would have done in the same month; at the end of the term it replays the same shocks with a chair who never moved. Those are outputs of this toy model, not forecasts. (Explanations and counterfactuals added 2026-10-18; the transmission lag, model version 2, added 2026-10-21.) Back to the main file · Briefing Room