Not everyone agrees with my relatively sanguine inflation forecast; indeed, some observers have questioned whether the current low level of the federal funds rate is not already excessively stimulative in light of the gathering recovery and the recent inflation data. I would like to make two observations.
These include a possible house price overvaluation, elevated household indebtedness and high residential real estate exposures of banks. Let me now turn to the emerging markets. During the peak of the pandemic crisis, capital outflows from emerging market economies (EMEs) were unprecedented in scale and speed – but also short-lived.