Suppose a central bank is considered to make a commitment to refrain from taking any monetary policy responses until the burst of a bubble, the private agents will surely take action based on such unfounded expectations. That will accelerate maturity mismatches and asset price increases, thus further accelerating the bubble and the adverse consequences of its burst.
In many ways these choices have become more complicated over time. We have more options than ever before – which is good – but these options can be bewildering. It is fair to say that many people find it hard to navigate their way through the myriad of possibilities out there.