Then, in our hypothetical example where inflation is stable at desired levels, the neutral rate would be a sufficient guide for monetary policy. 7  5  A physicist, a chemist, and an economist are shipwrecked on a desert island. Starving, they find a case of canned vegetables washed up on the beach, but they cannot locate a can opener. They consider possible solutions.
[2] Yet, changes in the way we operate and implement monetary policy – in our case, the fixed-rate full allotment at our main refinancing operations, (targeted) long-term refinancing operations and our asset purchase programme – have resulted in considerably more liquidity being injected into the financial system than is required by banks to meet their immediate liquidity needs.