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This paper revisits the traditional Taylor rule for the monetary policy under the dominant
currency paradigm. Starting from empirical evidence for open economies, it proposes a new
hybrid monetary rule able to characterize regimes with different degrees of monetary autonomy.
We integrate it into the theoretical framework of Gopinath et al. (2020) and seek to
identify an optimal degree of monetary autonomy / exchange rate flexibility that ensures the
best stabilization of national variables in the case of adverse foreign monetary shocks. Contrary
to the traditional trilemma, we find that this optimal situation corresponds to an intermediate
regime with ”partial” central bank autonomy and ”managed” exchange rate. The adoption
of such a regime can explain the high sensitivity of many countries' interest rates to the US rates.
