Measuring monetary policy’s effect on house prices

John Williams

FRBSF Economic Letter, 2015

Abstract: Central banks debate whether using monetary policy to foster financial stability through house prices is advisable. Although a rise in interest rates tends to lower house prices, it may come at a significant cost through reduced economic output and inflation. This implies a very costly tradeoff when macroeconomic and financial stability goals are in conflict. The following is adapted from a presentation by the president and CEO of the Federal Reserve Bank of San Francisco to the Bank Indonesia?BIS Conference in Jakarta on August 20.

Keywords: Housing - Prices; Financial stability; Interest rates; Monetary policy (search for similar items in EconPapers)
Date: 2015
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