Using this model, Li and Wei are able to infer the effects of the two LSAP programs and the MEP, controlling for changes in the expected path of the federal funds rate and its implications for long-term interest rates.
Central banks, as guardians of macroeconomic stability, naturally ask whether they should play a role. It does not necessarily follow that that role extends to the conduct of monetary policy. Central banks may have the ability to foresee macrofinancial instability. Whether they have the appropriate tools to prevent it is another matter.