It should not act in a way which may create disincentives for the other authorities. The fiscal and supervisory authorities are key players. When implementing an accommodative policy in response to a potential seizing-up of financial markets, the central bank should not shy away from calling on the fiscal authority to implement a credible medium-term budgetary adjustment.
I would even consider this to be a pre-condition for the central bank to enact such a policy. Otherwise the uncertainties surrounding the fiscal framework may contaminate monetary policy. 2  BIS central bankers’ speeches  On a more general note, an accommodative liquidity policy entailing atypically low interest rates needs reinforcing safeguards.