However, as the market for government and corporate securities develops over time, it is expected that traditional repo operations will progressively become more important. By regulating liquidity in the banking sector through open market operations, the Bank of Latvia can influence interest rates in the interbank market.
Regarding the mortgage component of private sector credit, it can be expected that the slowdown in house price increases and, in time, a reduction in housing volume to more sustainable levels should also lead to a slowdown in mortgage credit growth. However, we will remain concerned until we see some evidence of such a slowdown.