Should Monetary Policy Pay Attention to House Prices? The Czech National Bank's Approach

12 Pages Posted: 24 Jan 2018

See all articles by Mojmír Hampl

Mojmír Hampl

Czech National Bank (CNB)

Tomas Havranek

Charles University in Prague; Centre for Economic Policy Research (CEPR)

Date Written: December 2017

Abstract

Monetary and macroprudential policies are interconnected parts of the twin mandate of many central banks. We describe the Czech National Bank’s approach to one aspect of integrating these two policies, namely the use of a broader inflation measure that includes house prices and enters monetary policy considerations along with headline consumer price index (CPI) inflation. We further argue that, in terms of theory, the broader inflation gauge is at least as suitable as headline CPI for measuring the value of money, but we also acknowledge the practical problems that arise from the use of the broader index.

Full Publication: Macroprudential Frameworks, Implementation and Relationship with Other Policies

Keywords: macroprudential policy, monetary policy, financial stability, consumer price index, house prices, owner-occupied housing

JEL Classification: E31, E44, E50, R30

Suggested Citation

Hampl, Mojmir and Havranek, Tomas, Should Monetary Policy Pay Attention to House Prices? The Czech National Bank's Approach (December 2017). BIS Paper No. 94j, Available at SSRN: https://ssrn.com/abstract=3103138

Mojmir Hampl (Contact Author)

Czech National Bank (CNB)

Na Prikope 28
CZ-11503 Praha 1
Czech Republic

Tomas Havranek

Charles University in Prague ( email )

Celetná 13
Praha 1, 116 36
Czech Republic

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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