In such a setting, a central bank should find it optimal to deliver the social optimal level of inflation ex ante, but it might not do so ex post.4 The timeinconsistency problem may arise because macro-prudential policy is not perfectly effective in preventing financial imbalances and it is only a pre-emptive tool, while monetary policy can pre-empt as well as correct financial imbalances.
This is because macroprudential policy can affect only flows of credit but not the outstanding stock of debt. By contrast, monetary policy can also reduce the real stock of debt by creating surprise inflation.