As consumer protection issues have emerged in relation to subprime mortgage lending, the Federal Reserve has sought to address concerns by using its various supervisory and rulewriting tools. In doing so, it is extremely important to strike the right balance by seeking to protect consumers from abusive lending practices without restricting credit from responsible lenders to borrowers with shorter or lower-rated credit histories.
But definitely once the point is reached at which longer-term inflation expectations also begin to move away from the target. The question of inflation expectations brings us to the next – and certainly also the central – aspect when comparing the stagflation of the 1970s with current developments: the institutional framework in which central banks operate.