Over the past few years, the agencies have observed an increase in the volume of originations for residential mortgage loans that allow borrowers to defer repayment of principal and, sometimes, interest.
Model simulations conducted by DNB staff show that an earlier start of so-called Quantitative Tightening (QT) lowers both peak inflation and the required terminal rate via its effect on the term premium. When thinking specifically about QT, our decisions should rest on four principles. First, policy rates should remain the primary instrument to adjust our monetary policy stance.