The whole idea of the neutral interest rate is unrealistic. What the Fed is trying to establish is a level of interest rate that corresponds to the conditions of the free market. Note that in order to establish the neutral interest rate, which corresponds to the free market interest rate, the Fed continuously tampers with interest rates and money supply. Obviously, this is in contradiction to the free market. Observe that a free market interest rate implies that it originated in an unhampered market. Also, note that the central bank tampering to establish the neutral interest rate is a key factor behind the boom-bust cycles.
