Confidence in combininginflation-targeting-cum-flexible-exchange-rate regimes withisolated micro prudential regulation as a means to guaranteeboth macroeconomic and financial stability has beenshattered by the scale and synchronization of the assetprice booms and busts that preceded the global financialcrisis. It has now become clear that if monetary policymakers and prudential regulators are to succeed in achievingstability, there can be no complacency regarding asset pricecycles. This note explores some of the ways in whichmonetary policy can address asset price booms and buststhrough its integration with macro prudential regulation.