Recent literature has reported situations in which discretion dominates timeless perspective in the presence of elements that reduce the slope of the New Keynesian Phillips curve. Considering a model-consistent welfare metric inhibits this mechanism in the standard New Keynesian framework.

We study equilibrium determinacy in a New-Keynesian model where the Central Bank responds to asset prices growth. Unlike Taylor-type rules that react to asset prices, the proposed alternative does not harm dynamic stability and in certain cases promotes determinacy by inducing interest-rate inertia.