This paper reviews the recent literature on monetary policy rules, focusing on the implications of various real-world complications. The authors present a simple baseline theoretical framework to characterize the monetary policy design problem and then consider the effects of adding complications such as imperfect information and frictions. They show that optimal policy implicitly incorporates inflation targeting and that credible commitments to fight inflation can bring gains, even if the central bank is not trying to push output above its natural level. The paper also discusses the role of credibility in monetary policy and evaluates the implications of different policy rules, including the Taylor rule and forward-looking variants. The authors conclude by assessing the practical implications of their findings for policy-making and the implementation of monetary policy rules.This paper reviews the recent literature on monetary policy rules, focusing on the implications of various real-world complications. The authors present a simple baseline theoretical framework to characterize the monetary policy design problem and then consider the effects of adding complications such as imperfect information and frictions. They show that optimal policy implicitly incorporates inflation targeting and that credible commitments to fight inflation can bring gains, even if the central bank is not trying to push output above its natural level. The paper also discusses the role of credibility in monetary policy and evaluates the implications of different policy rules, including the Taylor rule and forward-looking variants. The authors conclude by assessing the practical implications of their findings for policy-making and the implementation of monetary policy rules.