Projecting the Impact of Peak Interest Rates on Variable Rate Mortgages

Pub. Date
11 November, 2022

In deciding at what level interest rates are set, monetary policymakers assess their decisions in terms of maintaining price stability. Concerns about the distributional consequences are not within the remit of monetary policy authorities, and nor should they be. That is the task for political decision-makers. In the current context where the monetary response comes after successive shocks to household finances, the distributional impact of interest rate changes must be understood in order to allow fiscal policymakers to design the appropriate response aimed at alleviating adverse effects.