we had the latest estimates of national income and spending today. the latest quarter was expected to be one of slower growth than the preceding one, which had been quite a strong one, in part because of some temporary factors which could not continue. taking the two quarters together suggests a picture of moderate growth. there will no doubt be a huge amount of breathless analysis of these data and intense speculation about what they mean. it will be worth remembering to take a step back and look at the longer perspective. in that spirit, allow me to offer an update of a chart from a speech i gave here two years ago ( graph 2 ). if the stock of public debt is, say, 100 per cent of gdp or more, and the rate of interest is 6 per cent rather than 3 per cent, that amounts to 3 per cent of gdp per year in additional servicing costs. few governments could easily manage an increase in servicing costs of that size. how many such entities will exist in their current form when such debts fall due is an interesting question. of the 30 companies that were included in the dow jones industrial average in 1964, about half had disappeared through merger, buyout or bankruptcy by 2014. bis central bankers ’ speeches graph 2 compared with last time i showed you this, it is pleasing that the us and the uk have recorded some solid growth, and new zealand – one of australia ’ s closest trading partners – has been growing particularly well, as the task of re - building much of their second largest city gets into full swing. some of these countries have been recording growth faster than ours lately. that they have sped up, and may even be starting to close the gap, should be welcomed. this chart was prepared prior to today ’ s data so the line for australia is not quite up to date. even so, there is still not much doubt about which country, among this group, has had the most consistent performance. of course these data are already somewhat dated. we can ask what has been happening more recently. the answer is that growth is continuing. most survey indications are that business conditions have improved a little, and that household sentiment has recovered a fair bit of the fall seen in april and may. those measures are close to average. we have seen the unemployment rate print higher in july, after several months where it had not changed much. because of measurement issues, interpretation of that monthly figure is even more hazardous than usual, and this may remain so in the months ahead. nonetheless, the

conditions of easier funding and help the ability of the financial sector to extend credit. but it can ’ t, for example, add to the supply of land zoned for housing, or improve the responsiveness of the construction sector to demand for additional housing stock. other policies have to do that – and it ’ s important that they do if we are to see easy credit result in more dwellings as opposed to just higher prices for the existing dwellings. monetary policy can ’ t create the additional infrastructure that most people agree we need. funding conditions are not, in fact, an impediment to infrastructure. the real issues are governance, risk - sharing and pricing – areas where other policies have to be right. monetary policy can ’ t directly cause the innovation and technological change that is so important for bis central bankers ’ speeches wellbeing of our citizens over time. other policy areas have to be right – and then the innovators and their backers have to be willing take the necessary risk. as for things that monetary policy should try to avoid, we are also cognisant of the fact that monetary policy does work initially by affecting financial risk - taking behaviour. in our efforts to stimulate growth in the real economy, we don ’ t want to foster too much build - up of risk in the financial sector, such that people are over - extended. that could leave the economy exposed to nasty shocks in the future. the more prudent approach is to try to avoid, so far as we can, that particular boom - bust cycle. it is stating the obvious that at present, while we may desire to see a faster reduction in the rate of unemployment, further inflating an already elevated level of housing prices seems an unwise route to try to achieve that. conclusion the future has no shortage of challenges, but that is hardly new. sensible policies in many areas are needed to help with the required adjustments. that includes monetary policy, within the limits of its powers. a very accommodative interest rate structure, and a degree of stability and predictability, has been in place for some time now. indeed the conduct of policy could perhaps be described as boring. if so, i would regard that as a small success. while the financial markets like to think about almost nothing else than what will happen to interest rates next month, i suspect most people are happy not to have to think about such things, and prefer focusing on issues of more enduring importance for their business or their