This “disconnect” between the financial and the business cycle creates a dilemma to traditional macro-economic policy and especially to monetary policy. The main remit of monetary policy refers to the relevant variables of the business cycle: inflation in the market of goods and services and the level of real economic activity.
Real economic activity is  1  See “The ECB’s monetary policy strategy”, press release 8 May 2003, including O. Issing (eds. ), “Background Studies for the ECB’s Evaluation of its Monetary Policy Strategy”, November 2003. 2  See Drehmann M., C. Borio and K. Tsatsaronis (2012), “Characterising the financial cycle: don’t lose sight of the medium term!” BIS Working Paper No. 380.