To conclude, central banks must better understand how income and wealth inequality impact the transmission of monetary policy and take that into account in their policymaking. The greatest contribution central banks can make is to deliver on their price stability mandate, as this will also contribute to broad-based and inclusive employment growth.
Recently, we have taken several steps that attempt to operationalize this concept, including the introduction of an internal models approach to assessing capital for market risks in large banks’ trading accounts.