policy encouraged faster output and employment growth. to be clear, the bank continues to be mindful of the risks posed by sustained exceptionally loose monetary policy. in some advanced economies like the uk, these risks relate mainly to housing markets. in emerging market economies, they centre on the volatility of capital flows. across the financial sector, a low for long environment risks complacency, excessive risk taking and undisciplined underwriting. in all cases, authorities can and should look to macroprudential policy tools to manage these risks so that monetary policy can remain focussed on its objective of establishing the conditions for a sustained recovery while maintaining price stability. given the powers and remit of the financial policy committee, the bank of england is exceptionally well - positioned to coordinate macroprudential and monetary policies. since august, inflation has fallen back to target ( for the first time in 5 years ) and unemployment has fallen rapidly towards 7 %, so what have we learned on the journey towards our threshold? with the wisdom of hindsight, there have been three main drivers of the recovery thus far : a marked reduction in extreme uncertainty, the repair of the core of the financial system and significant deleveraging by households. these have driven a recovery in consumer spending and housing investment, which together have accounted for almost all the gdp growth in the year to q3. as my colleague ian mccafferty outlined earlier this week, there are also early signs of a recovery in business investment. the less good news is that the recovery has not – as measured at least – been accompanied by meaningful productivity growth. given the continued openness of the economy and the credibility of macro policy, it is hard to think of any reason why there should have been a persistent deterioration the uk ’ s my mpc colleague ben broadbent discussed these issues extensively in september 2013 in a speech at the london business school, “ conditional guidance as a response to supply uncertainty ”. bis central bankers ’ speeches productivity performance. in fact there are several reasons to expect productivity growth to pick up as the recovery proceeds. for example, until recently, the fragility of the banking system limited the reallocation of capital and labour from less to more productive activities. indeed, whereas half of all productivity growth at the economy - wide level in the years prior to 2008 occurred through this channel, reallocation appears to have made no contribution to productivity growth in recent years. with the progress made in fixing the banking system

vitas vasiliauskas : welcome speech - bank of lithuania real estate conference welcome speech by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the virtual bank of lithuania real estate conference, 24 november 2020. * * * check against delivery good morning, dear real estate experts, conference attendees, dear colleagues, i am happy to welcome all of you at the eighth annual bank of lithuania real estate conference. throughout its history, our real estate conference has been held at various venues. this year – not exactly by choice – we are meeting virtually for the first time ever. i must admit – this time we are acting in a pro - cyclical manner. the bank of lithuania was able to save money by not having to rent a separate physical space for the conference. however, this also means, of course, that the commercial real estate market and, perhaps, some of the conference participants or attendees have lost some of their income. therefore, the pandemic has inevitably in one way or another affected everyone and everything, including the foundations of the lithuanian real estate market. for instance, we have observed a slowdown in the growth of house prices after the previous lockdown. expectations of the real estate industry have also taken a turn for the worse : our surveys show that the majority of commercial banks have started to expect a fall in real estate prices, particularly in the segment of commercial real estate. however, the predictions of a looming market crash have not come true. on the contrary – the housing market has gotten over the initial scare and recovered back to the new highs. towards autumn, new house sales already exceeded the average rate of several previous years. and today, we hear more voices discussing new record numbers of transactions in the housing market. what were the reasons behind the resilience of the housing market? we do have certain answers, but they are not yet complete and, probably, not definitive. i am therefore eagerly looking forward to today ’ s discussions and, in order to kick - start them, i will provide several possible explanations. first, i would like to mention positive demographic changes, particularly in vilnius – our capital city. in 2019, we still had doubts as to whether the growth of lithuania ’ s population was a one - off phenomenon. this year, however, it has become apparent : the country ’ s population is growing for the second consecutive year, and this trend is likely to continue, which is in turn a substantial