Here is it very important that the forecasts central banks consider in making monetary policy decisions are explicit about assumptions for future asset price movements, the uncertainty that surrounds them, the sensitivity of the forecast to alternative assumptions, and the costs and consequences of alternative paths for monetary policy. Even in circumstances where asset prices may appear to have moved away from fundamentals, and it seems reasonable to consider the implications of some deceleration in the pace of future increase or some decline, central banks need to be very cautious about adjusting policy in anticipation of that event, much less directing policy at inducing it. The substantial uncertainty about the path of asset price movements going forward necessarily reduces the case for altering policy in advance of the move. Consider the case in which it seems prudent for the central bank to incorporate an assumption for a significant move in the rate of change in future asset prices into its forecasts for output and inflation. If the central bank’s assumption is that asset prices are likely to fall over the forecast horizon, perhaps in the wake of a sustained rise in those prices, then it might in turn forecast a softer path for aggregate demand. These changes in the outlook might imply a lower expected path for the target rate than would have been implied by a different assumed path for the behavior of asset prices.
3  Part of the problem is that because of its unfamiliarity, economics can seem unappealing. The Royal Economics Society suggests people’s lack of enthusiasm for the dismal science is based on a narrow (and dry) perception of the subject and its masters. 4  As you might expect, I disagree. And so do most students, once we meet them. They are usually surprised by the breadth of topics that economists consider. For example, colleagues are currently working on issues such as the impact of Artificial Intelligence on the future of work, the role of the financial system in combatting climate change, and the value of diversity in decision making .A quick visit to our Bank Underground blog will reveal articles on the impact of mental health, crypto currencies and driverless cars on jobs, growth, inflation and wellbeing. A more disturbing impediment to the study of economics is the imposter syndrome. There is a perception that economics is “not for people like me” not least because the profession lacks diverse role models. And this challenge is reinforced by the limited opportunities available for students to study economics. 3  Joint Council for Qualifications, 2017 GCSE and A-Level results, available at: https://www.jcq.org.uk/examinationresults/gcses/2017/gcse-full-course-results-summer-2017/gcse-full-course-results-summer-2017 and Joint Council of Qualifications, 2017 A-level results, available at: https://www.jcq.org.uk/examination-results/a-levels/2017/main-results-tables/a-as-and-aea-resultssummer-2017 4 Royal Economic Society Newsletter, issue 180, January 2018 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  As a consequence, the economics profession is not as diverse as it should be.