Housing is One Reason Not All Countries Feel Pinch of Higher Interest Rates

Central banks have raised interest rates significantly over the past two years to combat post-pandemic inflation. Many thought this would lead to a slowdown in economic activity. Yet, global growth has held broadly steady, with deceleration only materializing in some countries.

Why are some feeling the pinch from higher rates and not others? The answer partly lies in differences in mortgage and housing market characteristics. The effects of rising monetary policy rates on activity partly depend on housing and mortgage market characteristics, which vary significantly across countries, as we show in a chapter of our latest World Economic Outlook.