Investment is expected to remain strong, benefiting from an extended period of very favourable financing conditions, balance sheet restructuring and accumulated and ongoing gains in earnings and business efficiency. Consumption growth should also strengthen over time, in line with developments in real disposable income, as the labour market situation gradually improves.
For example, a “no asset sale” plan – under which assets would simply run off as they mature – would push out the date of normalization by only a year or so. That approach would also address concerns over potential market disruption from the sale of off-the-run agency mortgage-backed securities. And it would also smooth remittances.