The missing word in central banks’ communication: Asset prices

Central banks’ new strategy is quite clear: keep monetary policy highly expansionary until full employment is fully restored. This may take various forms, which all arrive at the same result. Central banks cite the return of inflation as the risk of this strategy. Jerome Powell has said that the Federal Reserve is willing to accept “moderately” above-target inflation, offsetting the current low level of inflation. But there is no mention in central banks ’ communication of the real risk , which is asset price inflation. Either they are unaware of it, or they consider that macroprudential policies and not monetary policies are responsible for preventing bubbles.