For example, monetary policy actions that improve the economic outlook also tend to improve the conditions of financial firms; likewise, actions to support the normal functioning of financial institutions and markets can help achieve the central bank’s monetary policy objectives by improving credit flows and enhancing monetary policy transmission.
Still, the debate about whether it is possible to dedicate specific policy tools to the macroeconomic and financial stability objectives is a useful one that raises some important practical questions. A leading example is the question of whether monetary policy should “lean against” movements in asset prices or credit aggregates in an effort to promote financial stability.