Tightening financial conditions at a time when an economic recovery has just begun, when labor markets are continuing to weaken, when inflation is below its optimal level for the longer run, and when significant strains persist in the financial system would incur a considerable short-run cost in order to achieve possible long-run benefits whose extent is, at best, quite uncertain.
Still, we will need to be alert to any tendencies for movements in prices for commodities and assets to result in a sustained increase in inflation and inflation expectations; unanchored inflation expectations would ultimately destabilize output and undermine our ability to foster higher levels of employment.