Secondly, there is the question of whether or not monetary policy should try and prick asset price bubbles in order to avoid the consequences of the bubble popping at even higher levels with the attendant risks to financial stability.
Generally the response of central banks has been to argue that the best monetary policy can do is to try and anticipate the impacts of asset price movements on inflation, and to react in the same way that  BIS Review 103/2006  3  we react to any factor that can cause inflation to rise beyond the inflation target.