The equation allows for some lag in the effect of interest rates on the output gap. The neutral rate of interest is one type of equilibrium interest rate; it is defined to be the value of Rt that will lead to GDP growing at potential (and thus to no change in the output gap) provided the output gap is initially zero. The natural rate of interest, sometimes called the neutral rate of interest, is the interest rate that supports the economy at full employment/maximum output while keeping inflation constant. It cannot be observed directly. Rather, policy makers and economic researchers aim to estimate the natural rate of interest as a guide to monetary policy, usually using various economic models to help them do so. In this Letter, the natural rate is defined to be the real fed funds rate consistent with real GDP equaling its potential level (potential GDP) in the absence of transitory shocks to demand. Potential GDP, in turn, is defined to be the level of output consistent with stable price inflation,