If solvent banks are confident that they will be able to borrow from the central bank against good collateral to meet any unforeseen funding needs, then they need not completely stop lending even amid increased uncertainty about future funding needs. Lending by the central  4  Jean Tirole (2011), “Illiquidity and All Its Friends,” Journal of Economic Literature, vol. 49(2), pp.
And we should certainly address upward and downward deviations in the rate of inflation from the desired target. After all, the risks of the rate of inflation being too low over a long  2  BIS central bankers’ speeches  period are not to be underestimated.