Well, to start with, a central bank needs a sufficiently broad and reliable strategic framework that can analyse and detect risks to price stability in a timely fashion. This strategic framework should include – with a prominent role – indicators that can signal macroeconomic and financial imbalances when they are forming.
For example, when an unsustainable asset boom is inflating, fuelled by excess credit creation, the strategic framework should encourage the central bank to “lean against the wind” of financial exuberance.