"Governor Waller Addresses Financial Stability and Macroeconomic Policy in Speech"

The Federal Reserve's monetary policy and financial stability tools are interconnected via their respective effects on the macroeconomy, but they are separate and distinct from each other. Financial stability is essential for monetary policy to achieve its dual mandate of maximum employment and price stability. The Fed uses targeted and surgical tools to address financial stability issues, while monetary policy affects everyone and every part of the economy. The recent strains in the banking sector may lead to a tightening of price and nonprice conditions for lending, which could reduce the need for further tightening of monetary policy to lower inflation.