Only with the benefit of hindsight is it now clear that the prolonged period of price stability blindsided policy makers to the cancer of financial instability growing in the underbelly. An even more recent example of a conflict between policies for financial stability and price stability is of the ECB reversing its crisis driven expansionary stance by raising interest rates twice during April–July 2011.
4 Sometime early next year, though, I expect to see the upward pressure on inflation from these forces to ease as future increases in new or renewed leases moderate and the full effects of monetary policy tightening make their way to housing services prices.