Specifically, at a time of an economic downturn, a central bank stimulates the economy by guiding the actual interest rate to a level below the natural rate of interest. When the economy is overheated, a central bank raises the interest rate to a level above the natural rate of interest.
As the natural rate of interest is just an estimate based on a theoretical model and entails uncertainties, it should be interpreted with a certain latitude.7 With this in mind, I would say that the natural rates of interest have declined in many advanced economies including Japan (Chart 10).