Our measures have considerably improved financing conditions for households and firms, and have unblocked the flow of credit. Yet easier financing conditions may encourage investment in projects that are only profitable at low interest rates, and such loans risk turning sour as interest rates rise.
Indeed, banks and investors may be tempted to “search for yield”, without being adequately recompensed for the risk they are taking on. Our mandate is to deliver price stability. Ensuring financial stability risks are adequately contained is the role of banking supervision and macroprudential policy.