In addition to its value in signaling that the economy is doing better, a higher rate could facilitate the conduct of monetary policy. A lower natural rate of interest can complicate the operation of conventional monetary policy.
Since it is difficult to cut nominal interest rates below zero, conventional monetary policy is more likely to be constrained at low levels of the natural interest rate. The higher the natural interest rate, the more space central banks have to cut policy rates in response to an economic downturn, easing the conduct of conventional policy. Conclusion So where does this discussion leave us?