If the short-term real interest rate is 1.5%, the inflation rate is 5%, the target rate of inflation is 2%, and the output gap is 3%, the appropriate policy rate implied in the Taylor rule would be ______.

Explanation: 1.5% + 1.5 x 5% - 0.5 x 2% + 0.5 x 3% = 9.5%

The inflation rate is way higher than the target rate and the economy is overheating. The central bank should raise its policy rate to cool down the economy.