They had discovered the holy grail. 13. The unravelling of the Great Moderation during the crisis has diluted, if not dissolved, the consensus around the minimalist formula of inflation targetting. The mainstream view before the crisis was that price stability and financial stability reinforce each other. The crisis has proved that wrong. We have seen that price stability does not necessarily ensure financial stability.
Sometimes criticism is directed at our policies, either because by reducing interest rates now we hurt savers or because low rates are contributing to excesses in assets valuations. Implicitly, these views are attributing the responsibility of the low interest rate environment to central bank policies.