1  The views I express here are my own and not necessarily those of the Board of Governors of the Federal Reserve System. 2  Pending research to be published by Federal Reserve Board staff in the near future suggests that an increase in bank stress results in poorer economic performance in a way that scales with bank size.
If such a situation lasts too long, it can cause inflation expectations to become dangerously detached from the monetary policy. The risk of long-term inflation expectations no longer being anchored to price stability must be resolutely countered. This risk is limited for the time being, but there are signs that should not be underestimated.