Moreover, many banks that are far too small ever to be considered TBTF do provide some capital market services to their clients – often smaller businesses – a convenience and possible cost savings that would be lost under Glass-Steagall prohibitions. 8 With the present state of research, it is virtually impossible to quantify the social benefits of these economies.
But monetary policy actions have their full effects on the economy with relatively long lags. So what we must be concerned with is not the current rate of inflation but rather what may happen in 1998 and beyond. To maintain a low and stable rate of inflation in the period ahead, we must conduct monetary policy in a forward-looking, pre-emptive manner.