Monetary policy and asset prices: A narrow path

Posted: June 20, 2014 in economy
Tags: , ,

UK Only Article: 
standard article

Issue: 

How far can Amazon go?

Fly Title: 

Monetary policy and asset prices

Rubric: 

Central banks around the world are struggling to promote growth without fomenting worrisome risk-taking

Location: 

Washington, DC

Main image: 

20140621_FND001_0.jpg

UNTIL the global financial crisis, central banks treated bubbles with benign neglect: they were hard to detect and harder to deflate, so best left alone; the mess could be mopped up after they burst. No self-respecting central bank admits to benign neglect any longer. “No one wants to live through another financial crisis,” Janet Yellen, then a candidate to head the Federal Reserve, said last year. “I would not rule out using monetary policy as a tool to address asset-price misalignments.”
After six years of interest rates near zero the tension between central banks’ responsibility for output and inflation on one hand and financial stability on the …

via Economic Crisis http://ift.tt/UjPDIS

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