Central Bank talk: killing softly the housing bubble with words?

Detalhes bibliográficos
Autor(a) principal: Pacheco, Luís Miguel
Data de Publicação: 2008
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/11328/406
Resumo: Last year witnessed a strong concern from central banks with asset prices, with the sub-prime crisis effects still looming over the monetary and financial markets. There is now an extensive literature about the optimal response of central banks to the behaviour of asset prices but we think that rather than debating whether monetary policy should respond to asset prices, a fruitful area of research should consider other tools, besides the central bank’s short term interest rate, to prevent bubbles and their consequences. With the rising importance of transparency in monetary policy making, central banks started increasingly focusing on communication as a key tool to improve the effectiveness of monetary policy. This paper analyses communication emanating from the ECB since the creation of EMU, trying to assess whether communication showed any concern with asset prices behaviour, in particular the housing market. We conclude that in the last years the ECB behaviour was characterised by a riding of the house price wave, with its communication showing a strong concern with house prices which motivated the monetary policy tightening period that we are now abandoning. We think that with the latest data showing slower increases in house prices, “soft words” about it will start to diminish and be accompanied by the end of interest rate increases.
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spelling Central Bank talk: killing softly the housing bubble with words?ECBComunicationHouse pricesMonetary policyTransparencyLast year witnessed a strong concern from central banks with asset prices, with the sub-prime crisis effects still looming over the monetary and financial markets. There is now an extensive literature about the optimal response of central banks to the behaviour of asset prices but we think that rather than debating whether monetary policy should respond to asset prices, a fruitful area of research should consider other tools, besides the central bank’s short term interest rate, to prevent bubbles and their consequences. With the rising importance of transparency in monetary policy making, central banks started increasingly focusing on communication as a key tool to improve the effectiveness of monetary policy. This paper analyses communication emanating from the ECB since the creation of EMU, trying to assess whether communication showed any concern with asset prices behaviour, in particular the housing market. We conclude that in the last years the ECB behaviour was characterised by a riding of the house price wave, with its communication showing a strong concern with house prices which motivated the monetary policy tightening period that we are now abandoning. We think that with the latest data showing slower increases in house prices, “soft words” about it will start to diminish and be accompanied by the end of interest rate increases.Centro de Investigação em Gestão e Economia da Universidade Portucalense2013-08-16T11:56:13Z2008-01-01T00:00:00Z2008info:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/11328/406engPacheco, Luís Miguelinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-06-15T02:08:38ZPortal AgregadorONG
dc.title.none.fl_str_mv Central Bank talk: killing softly the housing bubble with words?
title Central Bank talk: killing softly the housing bubble with words?
spellingShingle Central Bank talk: killing softly the housing bubble with words?
Pacheco, Luís Miguel
ECB
Comunication
House prices
Monetary policy
Transparency
title_short Central Bank talk: killing softly the housing bubble with words?
title_full Central Bank talk: killing softly the housing bubble with words?
title_fullStr Central Bank talk: killing softly the housing bubble with words?
title_full_unstemmed Central Bank talk: killing softly the housing bubble with words?
title_sort Central Bank talk: killing softly the housing bubble with words?
author Pacheco, Luís Miguel
author_facet Pacheco, Luís Miguel
author_role author
dc.contributor.author.fl_str_mv Pacheco, Luís Miguel
dc.subject.por.fl_str_mv ECB
Comunication
House prices
Monetary policy
Transparency
topic ECB
Comunication
House prices
Monetary policy
Transparency
description Last year witnessed a strong concern from central banks with asset prices, with the sub-prime crisis effects still looming over the monetary and financial markets. There is now an extensive literature about the optimal response of central banks to the behaviour of asset prices but we think that rather than debating whether monetary policy should respond to asset prices, a fruitful area of research should consider other tools, besides the central bank’s short term interest rate, to prevent bubbles and their consequences. With the rising importance of transparency in monetary policy making, central banks started increasingly focusing on communication as a key tool to improve the effectiveness of monetary policy. This paper analyses communication emanating from the ECB since the creation of EMU, trying to assess whether communication showed any concern with asset prices behaviour, in particular the housing market. We conclude that in the last years the ECB behaviour was characterised by a riding of the house price wave, with its communication showing a strong concern with house prices which motivated the monetary policy tightening period that we are now abandoning. We think that with the latest data showing slower increases in house prices, “soft words” about it will start to diminish and be accompanied by the end of interest rate increases.
publishDate 2008
dc.date.none.fl_str_mv 2008-01-01T00:00:00Z
2008
2013-08-16T11:56:13Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
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dc.identifier.uri.fl_str_mv http://hdl.handle.net/11328/406
url http://hdl.handle.net/11328/406
dc.language.iso.fl_str_mv eng
language eng
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eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Centro de Investigação em Gestão e Economia da Universidade Portucalense
publisher.none.fl_str_mv Centro de Investigação em Gestão e Economia da Universidade Portucalense
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
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