On the margin, a more gradual process may also help ease the transition to higher rates for participants in money markets and bond markets, as well as for households, banks, and firms. In my own view, economic developments over the next year are reasonably likely to be consistent with a gradual adjustment of policy.
The goal here is that macroprudential instruments such as the anti-cyclical capital buffer should be set by national authorities, including German authorities; for these instruments must be able to respond to the situation in the respective country – for instance, to that country’s credit and real-estate markets. In addition, we also have recommendations for fiscal policymakers.