The Importance of Leaning Against the Wind

The economist Adam Pozen says that central banks should not lean against the wind because it's very difficult to identify ex ante whether a boom is going to turn into a bubble. I think what he's really describing is you shouldn't try and prick a bubble. Here's a bubble, let's jack up interest rates and we'll come falling down again like pricking a balloon. What I see is something much more akin to what you describe as leaning against the wind. The fact that one part of your economy is grossly overheated, that affects the average too. That does influence your decision on interest rates. And there's a lot you can do that doesn't involve simply putting up interest rates