Such an understanding of the longer-term prospects for the real interest rate aids in identifying variations in the concept over the intermediate run that is relevant for setting monetary policy - a period of several years, when cyclical forces dominate. Critically, such deviations in the intermediate run can be especially important for policy choice.
For example, an unusual hesitancy on the part of businesses to hire and spend emerged in 2001 after the collapse of equity prices and was subsequently reinforced by corporate-governance concerns; this hesitancy could be thought of as pulling the equilibrium real federal funds rate down temporarily below its longer-run value.