First, housing prices can be incorporated in the consumer price index, as they are in Canada. Second, monetary policy communications could adapt to reflect the behavioural dynamics of financial systems. An effective communications strategy for normal states may prove counterproductive in exuberant states. How central banks communicate can influence the degree to which low, stable, and predictable inflation fosters excess credit growth.
I think we did what we had to do in Europe, including in Portugal. Q – Do you consider it important to have a broader political consensus? A – It is key to have ownership. The more ownership there is at the national level, the more it can be demonstrated that reforms will be maintained and the less a precautionary security mechanism is needed.