Inflation Mechanism and Monetary Policy : Perspectives from Hong Kong

Hong Kong's inflation is heavily influenced by the development in the property market, as property prices can affect the CPI through the CPI rental component, rental cost effect on service fees and charges, and the wealth effect on aggregate demand. Therefore, the deployment of countercyclical and other prudential measures by Hong Kong SAR's policymakers not only enhances the banking sector's resilience to property market shocks, but also helps to mitigate big swings in consumer prices resulting from property market booms and busts.Full Publication: 'http://ssrn.com/abstract=2870167' Inflation Mechanisms, Expectations and Monetary Policy