The other principle is that the favourability of financing conditions is a relative concept. Historically low real interest rates do not necessarily imply that the degree of stimulus is historical too. The latter crucially depends on how real interest rates compare to real equilibrium rates – that is, those rates that are consistent with a stable rate of inflation.
Monetary policy is only accommodative if actual real rates fall below these equilibrium rates. Conversely, an increase in real interest rates is not necessarily a sign that financing conditions are becoming less favourable. For example, as the economy recovers, real and nominal longterm rates will gradually rise in tandem with the real equilibrium rate. Monetary policy will not tighten in this case.