||A connection between monetary policy and financial stability belongs to one of the most discussed topics of monetary economics in recent years which began to be investigated after the last financial crisis. The proposed project aims to find whether central banks (albeit not intentionally) have responded to the financial cycle (as a whole) in the past using their interest rate setting because interest rates have become the key component of monetary policy during the Great Moderation. If yes, the next questions to be addressed are to which specific phases of the financial cycle have they responded and whether they have acted systematically. These research questions will be tackled by estimating the reaction function augmented with variables representing the financial cycle of the chosen countries (euro area, Japan, Sweden, USA, Great Britain). Even though there is a large portfolio of research papers devoted to the connection between monetary policy and financial stability suggesting that central banks should dampen the financial cycle using their monetary policy, there is a lack of evidence addressing the question of whether central banks (explicitly or implicitly) tried to respond to the financial cycle developments in the past. Obtaining such evidence is then important for economic policy since it should reveal what impact does the financial cycle have on the economy and how the financial cycle can be regulated using monetary policy.