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Price Stability vs. Financial Stability?

If the US Federal Reserve raises its policy interest rate by as much as is necessary to rein in inflation, it will most likely further depress the market value of the long-duration securities parked on many banks' balance sheets. So be it.

NEW YORK – When a market liquidity and/or funding liquidity crisis occurs at a moment when inflation is above-target, tension between the objectives of central banks – price stability and financial stability – is inevitable. In such cases, I believe that financial stability must come first, because it is a precondition for the effective pursuit of price stability.