In my opinion, the key issue for central banks is to differentiate between need for short-term liquidity to rescue troubled financial entities and need for adoption of a credible monetary policy stance which aims to calibrate liquidity management in a way that it does not aggravate inflationary risks which in turn would trigger further complication and protract the global economic recovery.
While lowering interest rates, central banks have to weigh inflationary risks against the risk of recession and financial instability. In bailing financial entities, the central banks have to be concerned with “moral hazard” associated with such policy response as it often encourage more risky endeavors by salvaging institutions whose sole purpose of existence is risk taking and profit making.