Let us stop referring to the neutral interest rate

The monetary policy debate today most often uses the concept of a neutral interest rate. We remember that we have: Central bank key interest rate = Neutral real interest rate + Inflation target + a (inflation – inflation target) The neutral real interest rate balances supply and demand for goods and services when inflation is equal to expected inflation and the inflation target. The central bank’s “terminal” (stabilised) interest rate is then calculated as the sum of the neutral real interest rate (1%, 2%?) and the inflation target (2%), which would give 3% or 4%. As long as inflation is higher than the inflation target, the short-term interest rate is expected to be higher than this level. But the problem is that the neutral real interest rate is not a clear concept: It is endogenous (studies show that, even in the long term, it depends on monetary policy); It makes no sense in an open economy with high international capital mobility.