The Neo-Fisherian debate continues, and continues to miss the point. The debate is framed in terms of whether a higher interest rate causes higher inflation. But that’s not even a question. Or at least it’s meaningless unless you explain whether the higher interest rate is produced by an expansionary monetary policy or a contractionary monetary policy. Central banks have the tools to do it either way. On the other hand I am increasingly getting the impression that the New Keynesian model is incapable of handling that distinction.