To ameliorate the threat to financial and economic stability, the Federal Reserve and a number of other central banks in effect found they needed to provide a substitute for the arbitrage and trading no longer being undertaken in sufficient size by the private sector.
I mentioned the concept of a “neutral” interest rate, and the belief that the federal funds rate will be close to neutral after another 75-basis point increase at the end of this month. But some would argue that monetary policy is actually further away from neutral, based on the fact that current inflation is so much higher than the federal funds rate.