While, like any empirical results, these findings are a product of the methodology used, it is noteworthy that they are consistent across standard models – and indeed, similar results have been found using broadly similar approaches in other countries.
These results suggest that, even though monetary policy could, in principle, be used to reduce vulnerabilities in the financial system, it may be too costly in practice. Interest rates affect all parts of the economy and are too blunt an instrument to address an imbalance in just one part of the economy – household credit.