Price stability versus financial stability and the real rate of interest

Price stability versus financial stability and the real rate of interest Рa reaction to Borio (2018) 

In this paper, PEF Council member and Senior Economist at the TUC Geoff Tily¬†responds to a speech – ‘on money, debt, trust and central banking’ – given by Claudio Borio, Head of the Monetary and Finance Department and the Bank for International Settlements (BIS), at the 36th Annual Monetary Conference in Washington D.C., 15 November. While there is much common ground, ultimately he finds that Keynes’s conclusions on price and financial stability runs counter to Borio’s, and argues that the rate of interest should be kept low to maintain financial stability, while quantitative measures should be aimed at controlling inflation.

Download the paper as a PDF here.