There are a number of different ways of estimating it from the behaviour of market interest rates and other economic variables6. The shaded area in Graph 4 shows a range of plausible estimates for the neutral real interest rate obtained using a number of different approaches.
As you can see, there is a reasonable amount of uncertainty about the exact level of the neutral rate. Graph 4 also shows the (ex post) real cash rate calculated by deducting the trimmed mean inflation rate from the cash rate.7 When the real cash rate is above the neutral rate, the monetary policy stance is contractionary.