Persistently high current account deficits and excessive increases in house prices have not been limited to the United States but have also been characteristic in some euro area and many non-euro area EU countries. These imbalances will need to be corrected, suggesting that a period of slower economic growth may lie ahead.
The correction of macroeconomic imbalances will be orderly if, and only if, macroeconomic policy-makers retain a medium-term to long-term focus. In particular, the prevention of future crises needs to receive at least as much attention as short-term crisis management. In addition, all monetary and fiscal policies need to remain committed to their respective medium-term objectives, i.e. price stability and sound public finances.