# Neutral Rate

*Macro & Economy — Finicade finance glossary*

The interest rate that neither heats up nor cools down the economy — the resting level policy gravitates toward. Central banks steer above it to fight inflation, below it to fight slumps.

**Also known as:** neutral rate, r-star

**Related terms:** [Taylor Rule](https://finicade.com/glossary/taylor-rule), [Monetary Policy](https://finicade.com/glossary/monetary-policy), [Interest Rate](https://finicade.com/glossary/interest-rate)

**Taught in:** Macro & Markets — IS-LM-PC: The Road Back to Normal

Source: https://finicade.com/glossary/the-neutral-rate