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Should central banks target financial stability?

There have been calls in recent months for centralbanks to use interest rates in order to dampen assetprice inflation and to contain the risks which somethink are re-emerging in the financial sector.However, we expect central bankers to continueto use monetary policy primarily to focus onachieving a low and stable inflation rate. Policymakerswill instead seek to contain financialstability risks with their growing arsenal ofregulatory weapons.

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