Caruana defends role of interest rates in ‘leaning against' financial cycles

But ‘blunt' monetary policy can need more sharply focused counterparts


Even small interest rate rises when "applied persistently" can discourage excessive indebtedness by reducing the under-pricing of risk, BIS general manager Jaime Caruana said today, firing a new salvo in defence of the use of monetary policy in promoting financial stability.

Speaking at a conference in Sofia marking the 135th anniversary of the Bulgarian National Bank, Caruana said financial cycles "require a symmetric policy of leaning against it as well as cleaning up after it", while

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