BIS Review 20/2004  3  strengthen and inflation will remain low, and the demand for houses and equities will remain solid. Although these expectations could leave markets exposed to unfavorable news, they are not obviously unreasonable.
In the absence of any substantial distortions in asset prices and debt levels, households and businesses, on average, have not likely been engaging in misguided decisions that they, or the central bank, will come to regret. Nevertheless, as emphasized above, policymakers face a tremendous amount of uncertainty regarding this judgment.