Rate rises may be appropriate when asset prices are high, Fischer says
Fed's vice-chair also weighs options for tackling ZLB constraint
It may be appropriate to raise interest rates if asset prices reach "excessively high" levels across the economy, said Federal Reserve vice-chair Stanley Fischer on January 3.
The standard response to the question of whether monetary policy should be used to address financial instability is that macro-prudential tools should be the first line of defence – a point acknowledged by Fischer in his speech in California.
The Fed, however, has fewer tools at its disposal than other central banks.
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