These decisions generally involve the use of one tool (the interest rate), although quantitative easing has complicated this argument, and there is a clear objective, even if there is some weight on output variability in the Bank’s objective function. However, a financial stability mandate is more complicated.
It generally involves government, particularly when public funds are involved, in crisis resolution and the policy tools are more directed at particular sectors, and therefore may be more politically sensitive as the distributional impacts are more apparent than in the case of monetary policy.