User:Nick Gardner /Sandbox

Second, there are important questions to be answered about the design of monetary policy. At least one factor that fuelled the housing bubble – in the U.K., the U.S. and elsewhere – was the very low level of interest rates. There seemed to be a consensus among economists on both sides of the Atlantic that asset markets, including the housing market, could be left to their own devices and that interest rate policy should be directed solely at controlling price inflation, not asset price inflation. Additionally, it was understood that monetary policy could be used as the single main instrument of government macroeconomic policy. Inflation targeting, however, needs to be supplemented by some form of regulation specifically aimed at calming asset markets when they become overheated.

Shigenori Shiratsuka