In fact, at the time of our 2016 inflation-target renewal, the Bank emphasized research that concluded the benefits of using interest rates to lean against the buildup of household debt were quite limited, while the costs in terms of foregone output were large.
7 Since then, some new research suggests that allowing for the eﬀects of monetary policy on housing markets could significantly affect these calculations (Adam and Woodford 2018). More broadly, the endogenous risk taking of borrowers or ﬁnancial institutions can add another channel to the traditional monetary policy transmission mechanism (Adrian and Liang 2018).