The Organization for Economic Co-operation and Development on Tuesday said that Switzerland should maintain an expansionary monetary policy as inflationary pressures remain extremely low.
At the same time, it warns of the need for stronger macro-prudential legislation to dampen increases in mortgage lending associated with low interest rates and avoid the buildup of a domestic housing bubble.
Also, the OECD advised the Swiss National Bank to enlarge its data collection for effective oversight of the mortgage market. Further, the Paris-based organization said the central bank should be vested with powers to trim mortgage lending growth when it becomes excessive.
OECD Secretary-General Angel Gurría said, "Switzerland is likely to suffer from decelerating activity in its trading partners, notably across Europe, as well as from the pressures for appreciation of the Swiss franc."
According to OECD, Switzerland can use tax reforms to increase potential growth, reduce incentives for households to borrow and limit unwanted tax competition within the country.
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