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Federal Reserve Bank of San Francisco
FRBSF Economic Letter
Measuring monetary policy’s effect on house prices
John C. Williams
Abstract

Central banks debate whether using monetary policy to foster financial stability through house prices is advisable. Although a rise in interest rates tends to lower house prices, it may come at a significant cost through reduced economic output and inflation. This implies a very costly tradeoff when macroeconomic and financial stability goals are in conflict. The following is adapted from a presentation by the president and CEO of the Federal Reserve Bank of San Francisco to the Bank Indonesia–BIS Conference in Jakarta on August 20.


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John C. Williams, "Measuring monetary policy’s effect on house prices" , Federal Reserve Bank of San Francisco, FRBSF Economic Letter, number 28, 2015.
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Keywords: Financial stability; Housing - Prices; Interest rates; Monetary policy
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