Information on market practices and financial innovations can often provide early warning of risks, and hence are especially important among the various kinds of market intelligence. BIS central bankers’ speeches  7  The case in point is found in the subprime mortgage crisis in the United States. Securitized products were originated with financial engineering and distributed without appropriate risk assessment.
Tighter financial conditions or other lending conditions would likely cause households to reduce spending and businesses to pull back on investment and hiring, all of which will help move supply and demand back into better balance and help bring inflation down toward our 2 percent target.