Premium
Monetary Policy and Asset Prices
Author(s) -
Vickers John
Publication year - 2000
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/1467-9957.68.s1.1
Subject(s) - economics , monetary policy , asset (computer security) , inflation (cosmology) , monetary economics , interest rate , consumption (sociology) , goods and services , macroeconomics , economy , social science , physics , computer security , sociology , theoretical physics , computer science
How should asset prices affect monetary policy, and how do they? It is argued that asset prices should not be included in the measure of inflation targeted by monetary policy, which should focus on the prices of goods and services for current consumption. The information yielded directly by asset prices, e.g. about inflation expectations and interest rate expectations, is examined. Finally, the question of what asset prices add to other indicators is considered, and it is concluded that asset prices matter for monetary policy because they help to inform judgements about inflation prospects.