At this time, it is difficult to know just how much these developments in global financial markets have affected U.S. economic activity thus far.
Monetary policy is not the right instrument as it may lead to substantial deviations of aggregate output and inflation from their desirable levels. Macroprudential policy is the most promising tool to tackle financial stability risks. However, it is still quite recent – the underlying “buffers” were not built up before, they were built during the crisis.