The U.S. central bank should not rule out using monetary policy to combat financial instability as it remain uncertain whether regulatory powers alone could do the job, said Federal Reserve Vice Chairman Stanley Fischer on Monday. Many economists, including the Bank of International Settlements, have been pushing for higher rates to restore risk premia to more normal levels. Fischer said that central banks say they would like to use "macroprudential tools" but it is not clear they are sufficiently strong.
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