After all, when a central bank influences the cost of financing through changes in the policy interest rate, its actions affect the economy by changing asset prices, encouraging or discouraging risk taking, and influencing credit flows. This suggests that monetary policy has the ability to influence financial stability, for good or ill.
If a central bank eases monetary policy, it stimulates the economy, largely by encouraging households and companies to borrow more and pushing up the prices of many types of financial assets. The increased borrowing, together with the greater wealth that comes with higher asset prices, encourages households to spend more, generating income for other households and creating opportunities for companies.