The era of ‘mortgage dominance’
People have long freaked out about “fiscal dominance”, the idea that major central banks might submit to serving short-term government policy rather than the longer-term interests of the economy as a whole.
Perhaps they should actually be worried about “mortgage dominance”, which looks far more likely to force central banks into retreat than any angry finance minister.
The UK is a great example. To understand the recent actions and muddled communication of the Bank of England, you need to see it through the prism of mortgages and the precarious state of the UK housing market. The BoE’s wants to tighten policy and sound tough on inflation, but not so tough that mortgage rates go up any more than they have to.
This story originally appeared on: Financial Times - Author:Robin Wigglesworth
