Do policymakers raise rates even further above levels consistent with conventional policy and, if so, at what consequences for the economy? And what is the risk that, in taking such steps, a central bank would be seen by investors as taking on partial responsibility for asset prices? If so, would the pressure on central banks to support asset prices in market downturns increase?
Conclusion My remarks today have been intended as a salute to Otmar and to all the valuable contributions he has made over the years to my thinking and to that of policymakers around the world. Otmar, you have taught me much about intellectual rigor in support of central bank contributions to economic welfare-and about friendship.