FAST FIVE: Pioneer Of Inflation Targeting Adds Asset Prices To Its Framework, While The Fed Adds More Fuel

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RBNZ argues that the inclusion of house price sustainability fits in with their financial stability mandate.

RBNZ pioneered the inflation-targeting framework, introducing this policy regime in 1990; since then, it has been adopted by central banks worldwide.

RBNZ has learned, as have other central banks, that a simple inflation-targeting rule to conduct monetary policy is not easy or without unintended consequences.

In the US, boom-bust asset cycles, linked directly to easy money policy and the promise to maintain it for an extended period, triggered the last two recessions.

It would be wise for other central banks, including the Federal Reserve, to consider the actions by the RBNZ.

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