Abstract After the global financial crisis, it was observed that price stability alone would not ensure financial stability. The new paradigm indeed insists on the inclusion of financial stability as an additional macroeconomic objective. In this context, it is essential to understand how exactly is the new objective of financial stability will be placed in the existing framework. Also, the efficacy of monetary policy in this regard needs to be thoroughly discussed. This paper probes into the employability of monetary policy as a tool to achieve financial stability. We, therefore, compare between interest rates obtained from the standard Taylor rule and asset price augmented Taylor rule in the Indian context. The results suggest that targeting asset prices can be one of the effective ways to contain financial instabilities and consequent economic slumps.

中文翻译：

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货币政策与金融稳定：央行是否应该逆风而行？

摘要 全球金融危机后，人们观察到仅靠价格稳定并不能确保金融稳定。新范式确实坚持将金融稳定作为额外的宏观经济目标。在这种情况下，必须了解金融稳定的新目标将如何置于现有框架中。此外，还需要深入讨论货币政策在这方面的有效性。本文探讨了货币政策作为实现金融稳定的工具的就业能力。因此，我们在印度背景下比较从标准泰勒规则和资产价格增强泰勒规则获得的利率。