Source: Cobden Centre
by Dr. Frank Shostak
“Most commentators are of the view that what prevents the attainment of price stability is the deviation of the policy interest rate such as the federal funds rate from the neutral interest rate also known as the natural interest rate. The natural interest rate, it is held, is the one that is consistent with stable prices and a balanced economy. What is required then is that Fed policy makers successfully direct the federal funds rate towards the natural interest rate. … How is one to implement this framework of thinking? The main problem here is that the natural interest rate cannot be observed. How can one tell whether the market interest rate is above or below the natural interest rate?” (03/10/26)
https://www.cobdencentre.org/2026/03/why-the-neutral-interest-rate-cannot-be-established/