In such an environment, monetary policy has to remain accommodative, with low interest rates, which foster search for yield and froth in asset markets, making the use of macro-prudential policy to tame the financial cycle and to pre-empt asset bubbles even more necessary.
5  4  Borio, C. and H. Zhu (2008), “Capital regulation, risk-taking and monetary policy: a missing link in the transmission mechanism”, BIS Working Paper No. 268. BIS central bankers’ speeches  The trend for lower GDP and productivity growth and for ever lower real interest rates has continued for quite some time.