Monetary Policy and Asset Prices

Despite the low inflation of rencent years, some observers have wondered whether
 rapid gains in U.S. asset prices foreshadow rising inflarionary pressures. Would U.S.
monetary policy be improved if Federal Reservepolicymakers reacted systematically
to changes in the prices of widely held assets such as stocks and houses?
Some monatary experts believe so. In particular, Charles Goodhart, a former member
of the Bank of Englad'sMonetary Policy Committee, argues that central banks should
consider using housing prices, and perhaps, but to a much lesser extent, stock market
prices to guide their policy decisions.