Quantifying financial stability risks for monetary policy

They could rapidly tighten monetary policy at the risk of fuelling financial distress after years of ultra-low interest rates and balance sheet expansion.

Metadata
Provider: 
ECBECB
URL: 
https://www.ecb.europa.eu//pub/economic-research/resbull/2024/html/ecb.rb210129~d9b4085476.en.htmlhttps://www.ecb.europa.eu//pub/economic-research/resbull/2024/html/ecb.rb210129~d9b4085476.en.html
Retrieved on: 
Saturday, February 3, 2024
Information
Tags: 
Federal Reserve, Policy, HICP, Central bank, Federal, Probability, QVAR, Great, Fahr, Composite, VAR, Risk, SMA, Credit, European Central Bank, Aarhus University, Chart, Journal of Applied Econometrics, SRI, Systemic risk, Tail, CISS, Vulnerable, American Economic Review, NBER, Growth, Journal, Risk management, ECB, GDP, Risk register, Cryptocurrency
Geotags: 
UNITED STATES, UKRAINE
Summary
Key Points: 
  • They could rapidly tighten monetary policy at the risk of fuelling financial distress after years of ultra-low interest rates and balance sheet expansion.
  • Quantifying financial stability trade-offs therefore requires a way to gauge the three-way interaction between monetary policy, financial stability conditions and tail risks to the economy.
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