Private housing starts rebounded in March from a possibly weather-related dip in February, and sales of new and existing homes during the first quarter remained close to record levels. I expect residential investment to continue strong this year.
Measures supporting firms and households should continue, while remaining, as much as possible, temporary and increasingly targeted in nature. It will be crucial for prudential authorities to ensure that capital buffers can be used if needed to absorb losses and support lending and avoid credit supply constraints. At the same time, banks need to be proactive in identifying and managing credit risk.