1 Asset Prices , Financial Imbalances and Monetary Policy : Are Inflation Targets
نویسندگان
چکیده
The key issue in the debate, in my opinion, is that, in practice, much of interest rate setting is not driven by looking at inflation and growth forecasts at all horizons, but is based on rules of thumb. In particular, inflation-targeting is usually based on inflation forecasts 1-3 years out, often with a focus on a fixed horizon such as two-years. This can have the effect that asset price misalignments get an insufficient weight in policymaking.
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