First, concerning theoretical foundations, the natural real rate of interest – with an already long tradition in economic theory – plays a key role in modern rational-expectations models of monetary macroeconomics and stands on sound analytical ground. It is a tool for thinking about the monetary transmission process.
While this is above the target band of 2.0 to 4.0 percent—driven by supply issues concerning food and energy items—central bank estimates show that inflation will ease toward the midpoint of the target range next year and in 2023. The country’s gross international reserves (GIR) remain hefty at $ billion as of end-October this year, equivalent to 10.8 months’ worth of imports.