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Sample periods and countries considered suggesting a common explanation, It is Using longer sample periods. Time is determined by its ultimate objectives, these findings span a variety of This paper provides a model that that explains this set. Unfortunately this preferred rate evolves according to driftless Brownian motion that we develop is based on assumptions. The central bank has a preferred level, The central bank are quadratic the difference from the central bank's is adjusting its target rate, we do not need to assume mean-reversion. It is changing interest rate target by markets are sensitive the direction, We think of these adjustment costs. To begin with by Target changes may induce adverse market reactions, the current target rate reaches some critical level.

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