Professor Philip Lane:

Policies that boost the supply of affordable housing are what are important. The precise balance of public and private provision is a political judgment on which I should not express an opinion. There are many options available and politicians must work on them.

I return to the overheating issue because the last overheating episode was property driven. What we are seeing now is not credit or property driven. The wider macroeconomic position is being driven by other factors. We must remember that multinational firms and commercial real estate investors are not relying on the Irish banking system. It is possible to have a scenario where there is not a significant domestic credit issue but there is still a great deal of activity taking place in the economy that may prove to be unsustainable. Overheating is a much broader issue than just the housing market. While the housing market is important, it is not the only issue and we all need to think about that. When we have broader types of overheating, the Central Bank will do what it can to respond but ultimately it will come down to fiscal policy because that is the tool available, especially for a member of a monetary union. It is important to note that managing an overheating risk will be a fiscal issue.