In the long term, however, the current low level of interest rates is not compatible with price stability. If the economy performs as expected, the National Bank will further pursue the gradual adjustment of its monetary policy that has already been initiated. BIS Review 36/2006  1
In addition, as we have moved far away from near-zero interest rates, it makes sense to shift 3/5  BIS central bankers' speeches  away from a focus on normalizing the stance of monetary policy relative to some benchmark “neutral” interest rate, often referred to as “r-star.” Now, I have spent a good deal of my career studying r-star and I find it to be a useful concept for describing the economy’s longer-run behavior. Having said that, at times r-star has actually gotten too much attention in commentary about Fed policy. Back when interest rates were well below neutral, r-star appropriately acted as a pole star for navigation. But, as we have gotten closer to the range of estimates of neutral, what appeared to be a bright point of light is really a fuzzy blur, reflecting the inherent uncertainty in measuring rstar.8 More than that, r-star is just one factor affecting our decisions, alongside economic and labor market indicators, wage and price inflation, global developments, financial conditions, the risks to the outlook… I think you get the point. Returning to the balance sheet, the question of what exactly the new normal looks like is still being analyzed and discussed at the Fed.