European Central Bank Vitor Constancio said Monday that some asset classes point to overheating in an environment of extremely low monetary policy.
Speaking at a conference on macro-prudential research in Frankfurt, Constancio said that these developments brought “macro-prudential policy again very much on the agenda.”
Extremely accommodative monetary policy around the globe provides “an environment where investors search for yield and financial imbalances can build up,” Constancio said. “In fact, the ECB and the IMF financial stability analyses confirm that specific asset segments, among which there is real estate, point to some overheating in several countries.”
In this context, “the issue then arises whether macro prudential policy needs to react,” Constancio said, adding that for macro-prudential policies to be effective, early and decisive action appears to be importance.