Fixed-rule, Feedback-rule and Discretionary Monetary Policies

Fixed-rule policies
To keep the quantity of money growing at a constant rate regardless of business cycle, independent of the state of the economy

Feedback-rule policies
Push the interest rate ever higher in response to rising inflation and strong real GDP growth and ever lower in response to falling inflation and recession, i.e. in response to changes in the state of the economy.

Discretionary policies.
A discretionary policy responds to the state of the economy by using all the information available, including perceived lessons from past "mistakes." Most macroeconomic policy actions have an element of discretion because every situation is to some degree unique.

Policy Lags
The effects of policy actions taken today are spread out over the next two years or even more. The Fed cannot forecast that far ahead.