That having been said, there can be situations when the constellation of the shocks affecting the real economy and financial markets, in particular, the impact of “structural” or “behavioural” changes related to productivity developments or market sentiment, may create trade-offs and pose challenges for central banks aiming at the simultaneous preservation of price stability and financial stability. Let me give you two examples.
There can be situations in which financial imbalances emerge – with adverse consequences for future financial and price stability – in an environment of stable prices and the associated very low interest rates.