The article explores how adjusting interest rates can affect systemic risk in the economy. By incorporating time-varying systemic risk into a standard economic model, the researchers found that leaning against financial variables only slightly improves welfare. However, implementing an optimal macroprudential policy, like a countercyclical capital requirement, can significantly reduce systemic risk and increase welfare by 1.5%. Surprisingly, tightening monetary policy may not always decrease systemic risk, especially during economic downturns. Additionally, trying to overly stabilize output through monetary policy can lead to increased volatility in the economy.