Cúrdia and Woodford consider the desirability of modifying a standard Taylor rule for a central bank’s interest rate policy to incorporate either an adjustment for changes in interest rate spreads or a response to variations in the aggregate volume of credit. The authors use a simple DSGE (dynamic stochastic general equilibrium) model with credit frictions, comparing the equilibrium responses to various disturbances under the modified Taylor rules with those under a policy that would maximize average expected utility. According to the model, a spread adjustment can improve on the standard Taylor rule, but the optimal size of the adjustment is unlikely to be large, and the same type of adjustment is not desirable regardless of the source of variation in credit spreads. A response to credit is less likely to be helpful, and its desirable size (and sign) is less robust to alternative assumptions about the nature and persistence of economic disturbances.