The key challenge is therefore to understand whether monetary policy can or should be more proactive and “lean against the wind” also in periods of growing financial imbalances in a preemptive manner, even in the absence of immediate threats to price stability. This is an open issue on which opinions diverge. I will limit myself to the following observations.
First, risk premia in equity, housing, government bonds and corporate debt markets had reached over the past ten years – with different timing – a historical minimum. They had consistently declined since the mid-eighties.