Jackson Hole Bubble Clash Shows Challenge for Central Bankers

Central bankers and economists at a Federal Reserve symposium clashed over how to best contain asset-price bubbles three years after a crash in U.S. housing prices led to the worst global recession since World War II.

Bank of England Deputy Governor Charles Bean told the meeting in Jackson Hole, Wyoming, yesterday that regulatory tools would be most efficient at deflating a boom without inflicting broad economic damage. Stanford University Professor John Taylor, creator of an interest-rate-setting formula used by central banks, said the tools are “unproven” and using them may cause central bankers to lose focus on adjusting rates properly.