Additionally, financial and business cycles do interact and the monetary policy stance does affect risk-taking by the financial sector. Indeed, some current research supports the view that monetary policy seems to have contributed to the high risk appetite in the financial system and thus to the build-up of financial imbalances.
This commitment has contributed to stabilizing market interest rates, and thus firms have been able to raise funds at low interest rates. The commitment’s positive effects through interest rates on the economy will strengthen as corporate profits increase with economic recovery. III.