Towards financial stability-oriented monetary policy? Some evidence
Should monetary policy take financial stability into account? If so, what would such a policy look like? These questions have gained greater prominence recently as tensions between price and financial stability have increased, while new research has found that a leaning-against-the-wind strategy would yield little or no benefits in terms of output and inflation. Drawing on BIS research presented in the Annual Report, this presentation argues that a financial stability-oriented monetary policy can yield significant benefits. For this to be the case, such a policy would need to keep an eye on financial stability all the time, during the whole financial cycle, so that the economy never strays too far away from "financial equilibrium".
- Presentation slides (18 pages, 280 kb)