It will also be important to monitor both model-based and financial-market based estimates of expected future inflation-indexed real interest rates (for example, 5-year real rates 5 years forward) suitably adjusted for term premium and liquidity effects as one indicator of longer-run r*. Before the financial crisis, these 5-year real rates 5 years forward averaged around 2 percent after a term premium and liquidity adjustment.
The Fed, for example, cut the penalty rate on its discount window from 100 points to 50 points in order to lessen the cost of emergency funding to banks. Some central banks also widened the range of securities in which they were prepared to deal.