Trends in the global economy

The Governor discusses the impact on the provision of housing finance of recent trends in the world economy—both in approaches to economic management and the revolution in financial services. There is now widespread agreement that monetary policy should be directed to achieving and maintaining permanently low inflation. If that succeeds, the demand for housing as a hedge against inflation should decline, so that real house prices may tend to rise more slowly over time; by moderating the economic cycle, it should also lead to greater stability in these prices. On the microeconomic side, the Governor discusses the formidable challenges presented to financial institutions—and to their regulators—by the continuing process of competition and innovation.

Trends in the global economy