Central banks face a near-impossible task when confronted by irrational exuberance, for at times like these controlling the market is like herding schoolchildren on a sugar high. Besides, if it raises rates enough to stop a stock market bubble, it could just as easily kill the economy. This is a very real risk, for when a market is aflame and maddening for profits, raising rates a percentage point or two may have very little effect on the market, but would have an enormous impact on other businesses that depend on borrowed money, like manufacturing and utilities.
