Must-Read: Barrel. Fish. Gun:
: Interest Rate Pegs in New Keynesian Models: "John Cochrane asks: Do higher interest rates raise or lower inflation?'...
...We find that pegging the interest rate at a higher level will induce instability and most likely lead to falling inflation and output over time. Eventually, this will precipitate a change of policy...
http://pages.uoregon.edu/gevans/InterestRatePegs_26april2016.pdf
