Masaaki Shirakawa is a distinguished visiting professor at Aoyama Gakuin University in Tokyo and a former governor of the Bank of Japan.
The neutral (or natural) interest rate is a key concept in the formulation of monetary policy. Defined as the real (or inflation-adjusted) rate that balances aggregate demand with supply, it neither accelerates nor decelerates inflation. It serves as a benchmark for evaluating the restrictiveness of monetary policy.