The current very expansionary monetary policy stance is a response to persistently below-target inflation, but has also fuelled a long housing boom which increasingly poses risks. Stronger macro-prudential policy, such as a debt-to-income cap, is called for to reduce financial and macroeconomic vulnerabilities. Easing planning and rental regulations and reforming housing taxation would help stabilise house prices, increase labour market mobility and improve equality.      

Visit www.oecd.org/eco/economicoutlook.htm                                    

©OECD Observer No 308 Q4 2016