ANZ has suggested that we need to broaden the RBNZ target to include asset prices. No.
Everyone seems to be mixing up the RBNZ’s monetary policy goals and its financial stability goals. Now, inside of the financial stability targets a good look at asset prices and a dose of prudential regulation COULD be useful.
In terms of monetary policy this does not matter.
The goal of monetary policy is to shift around the interest rate and the supply of money such that “inflation” is constant. Inflation is the growth in prices that has nothing to do with changes in productivity or changes in relative prices.
If I had to target something, I would target expected future growth in the adjusted labour cost index. But that is a story for another day 🙂 [in fact this isn’t an issue I have covered in the inflation debate yet, I’ll have to have a sit down and think 😛 ]