I do not propose to say more about this, other than to observe that this can, at least in principle, be encompassed within the inflation targeting framework, recognising the legitimate trade-off between inflation variability and output variability. But we also need to remember how much more painful it is to have to wind inflation back down, once price expectations have been disturbed.
More interesting, in the current debate, is whether monetary policy should do more to achieve financial stability. A clear dichotomy or specialisation has developed, in which monetary policy is seen as the instrument for maintaining price stability, and prudential regulation is ”assigned to” financial stability. This dichotomy is increasingly reflected in the vogue of separating the central bank from the prudential regulator.