The competing view is that central banks should not attach any special significance to asset prices, unless they are accompanied by inflation pressures that, in any case, would warrant higher interest rates. Instead, monetary policy should respond vigorously to the consequences of the collapse of an asset price bubble (Greenspan 2002).
This approach reflects the opinion that it is difficult to determine in real time whether the economy is undergoing a boom and to predict an asset price bust and, furthermore, that in order to slow an asset price boom, monetary policy has to be tightened so much that economic growth is severely affected.