ABSTRACT. Duarte assumes that the monetary authority controls the nominal interest rate and supplies the amount of nominal money balances demanded. Bhuiyan also assumes that people form inflationary expectations looking at the contemporaneous monetary policy decision, the real interest rate, the exchange rate and the federal funds rate. McCauley remarks that the transmission of the policy interest rate out the yield curve can be strongly affected by exchange rate expectations. Mariano and Villanueva claims that the last 15 years have seen extensive use of monetary policy approaches that are rules-based, but with considerable judgments factored in.