##dative monetary policies. the creation of a macroprudential framework with its own objectives, authorities and tools provides an important complement to monetary policy. in the long term, the complementarity naturally arises because the respective objectives are intertwined and one cannot be achieved without the other. at the same time, they complement each other equally well in the short term. when asset prices, leverage, financial exuberance and strength of the economy and inflationary pressures move in the same direction, monetary policy and macroprudential policy typically pull in the same direction too. on the other hand, when financial imbalances increase amid an environment characterised by relatively muted inflation, the twin goals of price stability and financial stability can be best achieved by resorting to two separate instruments, in line with the tinbergen principle. 4 while more restrictive monetary policy may be able to lean against the build - up of financial imbalances, targeted macroprudential measures are typically a more efficient way of addressing their causes. this is especially relevant in the euro area, given its multi - country composition. macroprudential measures can be targeted to specific member countries to address the build - up of local imbalances, which cannot be addressed in an efficient manner by the single monetary policy. the presence of macroprudential policy should, however, not lead monetary policy to neglect financial stability issues. when the build - up of financial imbalances affects a large part of the economy, only monetary policy rates have the ability to reach into all “ corners of the economy ” ( to borrow from jeremy stein ’ s remark ). 5 and when the build - up of financial imbalances pervades the economy, monetary policy should stand ready to adopt a leaning - against - the - wind posture. the monetary policy horizon in pursuing its price stability mandate, monetary policy can inadvertently exacerbate financial stability risks. as monetary policy operates under uncertainty, there have been episodes of monetary policy mis - calibration throughout economic history, but the consequences for financial stability very much depend on the prevailing financial regulatory regimes. monetary policy mis - calibration may lead to the build - up of financial imbalances in particular when the central bank is faced with a sequence of positive cost - push shocks that curb domestic price pressures for a prolonged period of time. think, for instance, of the gradual penetration of new technologies in recent decades – primarily the internet and related digital technologies – which boosted on - the -

##udence, patience and persistence remain the guiding principles for our monetary policy. significant monetary policy stimulus is still needed to support the further build - up of domestic price pressures and headline inflation developments over the medium term. the protracted period of low interest rates that contribute to the ongoing economic expansion necessary for the continued sustained convergence of inflation has so far not given rise to discernible financial stability risks in the economy as a whole7. in the present environment and at the current stage of the monetary policy cycle, however, it is important to be mindful that keeping rates low for long periods can raise challenges for financial stability further down the road. in this context, activating macroprudential instruments where needed is essential to ensure resilience, contain procyclical behaviours and prevent the emergence of financial imbalances. macroprudential measures are the appropriate response in situations where signs of financial imbalances are not pervasive. they can be targeted to specific member countries or sectors to address the build - up of local imbalances, which cannot be addressed in an efficient way by the single monetary policy. macroprudential measures have already been proposed or implemented in some euro area countries. authorities have taken decisions to calibrate the systemic risk and countercyclical capital buffers, as well as sectoral capital requirements for real estate and housing, and to introduce caps on loan - to - value ratios to counteract emerging risks. conclusion our monetary policy measures have proven effective in sustaining a resilient recovery and addressing the risks to price stability. this in turn provides a strong contribution to financial sector resilience. looking ahead, significant monetary policy stimulus is still needed to support the gradual build - up of price pressures for inflation to return to levels below, but close to, 2 % in a durable fashion. at this stage of the cycle, careful monitoring of the risk - taking channel of monetary policy is important. while there is no evidence of excessive misalignment across asset classes in the euro area right now, there are signs that valuations are stretched in specific market segments. 4 / 5 bis central bankers'speeches macroprudential instruments are best placed to counteract the emergence of specific financial imbalances in an efficient and targeted manner. macroprudential policy and monetary policy thus complement one another in pursuit of their respective objectives. 1 for a comprehensive overview, see carmen m. reinhart and kenneth s. rogoff ( 2013 ), “