Chicago Fed president Evans downplays the notion that the Fed should identify and try and burst asset bubbles as a policy objective.
Typical levers of monetary policy are too blunt to tackle bubbles, he says. Central banks should only respond to bubbles as a means of achieving financial stability.
Looks like there will be a robust debate within the Fed on this issue as some have said the central bank must move earlier to try and identify and prevent bubbles. Most recently, Janet Yellen spoke in favor of a more proactive approach.
