The key question today is whether the services sector will eventually “catch down” – which is what we have seen in previous cycles – or whether it will be insulated from the effects of policy tightening for longer than in the past, given the strength of demand and employment in the sector.
[9] For households, there is evidence that it will take longer for policy changes to pass through to interest burdens in this tightening cycle, as a higher share of households have fixed-rate mortgages than in the mid-2000s.