The Interaction of Monetary and Macroprudential Policies - Background Paper


Date: December 27, 2012
 
Electronic Access: Full text

 
Summary:This paper provides background material to support the Board paper on the interaction of monetary and macroprudential policies. It analyzes the scope for and evidence on interactions between monetary and macroprudential policies. It first reviews a recent conceptual literature on interactive effects that arise when both macroprudential and monetary policy are employed. It goes on to explore the “side effects” of monetary policy on financial stability and their implications for macroprudential policy. It finally addresses the strength of possible effects of macroprudential policies on output and price stability, and draws out implications for the conduct of monetary policy.

 
Series : Policy Paper
Subject(s): Monetary policy | Brazil | Turkey | Korea, Republic of | United States | Macroprudential policy | Price stabilization | Inflation targeting | Financial stability | Financial systems | Background papers