It is effects of this type that are referred to in the international debate when arguing that the policy rate is far too blunt an instrument to counter financial imbalances. Sweden's experiences also suggest that the policy rate cannot always be expected to be available for this purpose. Even when a central bank is leaning quite moderately against the wind, such a policy could be in conflict with the task of maintaining confidence in the inflation target. Here too, of course, the question arises of whether it is really so important to maintain confidence in the inflation target. Would it not be possible for monetary 7 [20]  policy instead to just lean against the wind and let inflation develop as it will? Once again, I will return to this shortly. Before continuing, I would like to add that there is a growing amount of research that explicitly attempts to calculate the costs and benefits of using the policy rate to attempt to counteract financial imbalances. The debate is ongoing and the jury is still out. 13 Of course, in this context, the view I present here should only be seen as a country-specific case study. But considering that practical experience of this type of policy is very limited, reflections from someone who has been involved in taking decisions in a country that is ‘ahead in the cycle’ may perhaps be of some value.
For example, my staff produces monthly indexes of economic activity – essentially local measures of output – for the city, New Jersey and New York. We have also started a consumer panel to track local household credit conditions. In addition, we have a new survey about credit and financing for small businesses. Almost 900 regional businesses responded to our May 2011 poll – nearly 10 percent from the Bronx. If you, as part of a small business, would like to participate in our January poll, please pass your card to my colleagues in the audience. This December we will host a workshop for the New York City metro area’s small businesses – to provide information about credit enhancements and loans from the Small Business  BIS central bankers’ speeches  1  Administration. I will send your president, Mr. Caro, details about how to register. I hope to see you in at the New York Fed in lower Manhattan in December. As you know, even states as wealthy as New York have large pockets of poverty. So, we target some key initiatives specifically to low- and moderate-income groups. We have worked hard to help neighborhoods, including some in the Bronx, that face high foreclosure rates. Later today, I’ll tour some hard-hit areas with the city’s commissioner of Housing Preservation and Development. To share what we learn about our diverse District, we have a rich website. I invite you to visit newyorkfed.org to explore our detailed maps and information on small business, credit and housing conditions.