Limitations of the Taylor principle

My guess: Just because a product may have demand-pull inflation, that doesn't necessarily mean there's an overall inflation in the economy. Any interest rate increase must necessarily take into consideration not only the impact to our economy, but how that will affect our products and services in the world marketplace.

Not all products or services inflate at the same rate since most consumer products are based on demand which changes with the economy.

Look at housing. In the areas of high demand, prices have been increasing at double-digit rates while interest rates have remained relatively low.