House Prices in the Taylor Rule?

Rick Mishkin seems to think that house prices should be added to the Taylor rule:

Central bankers should ease monetary policy quickly and aggressively in response to a big fall in house prices, Federal Reserve governor Frederic Mishkin said on Saturday.

Presenting a paper on the final day of the Fed�s Jackson Hole symposium, Mr Mishkin said policymakers should not wait until output falls, but should �react immediately to the house price decline when they see it.�

He said the optimal policy response was both quicker and more aggressive than that suggested by a standard policy rule, in which policymakers respond only to deviations in output and inflation.

He said simulations show that this approach �can be very successful at counteracting the real effects� of even a large house price slump, because of the long lags from changes in housing wealth to changes in consumer spending.

From the FT.

Update: Here is the Mishkin paper.