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Should they raise interest rates, even if this would not be appropriate from the perspective of price stability and economic activity (cf. slide 22)? There are three reasons for not doing so. First, we have the rule postulated by Tinbergen in the 1950s (cf. slide 23), which states that for each economic policy target there needs to be a separate policy instrument. 22 This reduces potential conflicts of interest when using instruments and contributes to the efficient achievement of each individual target. The Tinbergen rule is also justified in our case. If central banks were to use the interest rate tool for the purposes of financial stability, they might have to accept departures from the objective of price stability. Such an approach, though, would call into question the credibility of the central bank’s avowed pursuit of price stability. In the long term this would have a negative impact on trust in the central bank and limit its ability to ensure the goal of price stability. Second, the crucial question is how effectively interest rate rises actually influence overheating in the credit market. I have already explained how the interest rate environment affects the behaviour of economic agents in the credit market. Higher interest rates, then, should have a dampening effect on credit growth. Yet various analyses indicate that it often takes a very sharp interest rate rise to significantly counteract excesses in the credit market.