For example, some researchers have argued that gradual adjustment of short-term rates gives commercial banks more time to adjust to changes in the costs of short-term funding and thereby increases the stability of bank profits (Cukierman, 1991).
Slow adjustment of short-term rates may reduce financial stress for other economic actors as well - for example, households with adjustablerate mortgages and businesses with heavy needs for short-term financing. A variant of the financial stability argument is that the Fed chooses to move interest rates gradually to minimize the risk of “shocking” the bond market.