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Should Inflation Measures Used by Central Banks Incorporate House Prices? The Czech National Bank's Approach

Tomas Havranek () and Mojmir Hampl

Research and Policy Notes from Czech National Bank

Abstract: In this note we describe the Czech National Bank's approach to incorporating macroprudential considerations into monetary policy decision making: the use of a broader inflation measure that gives substantial weight to house prices and is considered along with headline CPI inflation. We argue that, in terms of theory, the broader inflation gauge is at least as suitable for measuring the value of money as headline CPI inflation is, but we also acknowledge practical problems that arise from the use of the broader index.

Keywords: Consumer price index; financial stability; house prices; macroprudential policy; monetary policy; owner-occupied housing (search for similar items in EconPapers)
JEL-codes: E31 E44 E50 R30 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-mac, nep-mon and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:cnb:rpnrpn:2017/01

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