monetary policy statement. similarly, if housing pressures are much less of a concern and the exchange rate continues to appreciate and the inflation risk looks low, it may create opportunities to lower the ocr. macro - prudential measures can be useful in helping to restrain housing pressures, but they are no panacea. this reinforces the importance of progressing measures to enhance productivity in the construction sector, free up land supply, and examine related tax issues. if the house price and credit expansion begin to fuel excessive consumption spending and inflationary pressures, a monetary policy response would become more likely. blanchard, olivier, giovanni dell ’ ariccia, and paolo mauro, april 2013, “ rethinking macro policy ii ; getting granular ”, imf staff discussions note. bis central bankers ’ speeches v ) concluding comments as a small open economy, new zealand can expect to be buffeted by an array of domestic and financial shocks that are sometimes temporary in nature or linked to longer - term global structural change. but these are extraordinary times. not only does the economy need to absorb the impact of a significant drought, a major programme of fiscal reduction, and the resource allocation associated with rebuilding our second largest city, we also have to adjust to heavy portfolio inflows that cause our exchange rate to appreciate and reduce the profitability and competitiveness of our tradables sector. and we need to do so at a time when house price inflation is increasing risk in the new zealand financial system. many of these challenges will be with us for some time. the government ’ s fiscal adjustment is expected to be spread over three years, the canterbury rebuild is likely to take a decade or longer, and the housing supply / demand imbalance in auckland could take three to five years to close if left to supply measures alone. on the external side, new zealand is likely to be an attractive investment destination for the foreseeable future and interest rate rises in the major economies may be two or more years away. the reserve bank needs to achieve its price and financial stability objectives in this environment. doing so will require us to draw on the full array of policy instruments, including macro - prudential instruments, as appropriate. bis central bankers ’ speeches

##4 economies highly likely for the time being to adopt divergent policies, and to continue to develop new tools, we have to closely analyze the positive and negative effects of the implementation of non - traditional monetary policy tools that have been accumulating over time, and develop countermeasures to cope with them. although quantitative easing policies, if looked at from the global economic perspective, can be considered to have helped the global economy to pull out of the crisis, we cannot deny that bis central bankers ’ speeches they have also had side effects in some regional economies including emerging market economies, causing imbalances due to their negative spillover effects. various measures were needed to correct market failures, but it cannot be said that they have completely cleared away doubts such as of whether moral hazard is widespread, whether market discipline is being established through the current measures at the expected level initially judged necessary to prevent crisis recurrence, and whether the too - big - to - fail behavior will be able to be eliminated. various forms of liabilities are increasing due to the socialization of the costs of overcoming the crisis. how all of these liabilities, which have to be dealt with at the national level without individual agents assuming any responsibilities, can be resolved, and at what cost, remains a burden on us. moreover, although the qe tapering decision must have been made based upon a judgment of us economic recovery, some within academia still raise the possibility of secular stagnation. various factors are pointed out in this regard, including the global imbalances resulting from excessive savings in surplus countries, population ageing, declining productivity and the decreased volume of short - term investment due to the falling relative prices of capital goods, and we should pay attention to the development of this discussion going forward. forward guidance policies are prevalent in advanced economies. it is debatable whether it is appropriate for us to carry out forward guidance policies right now, but we may face situations that do not allow us to stay away from such policies for very long. meanwhile, although we expect the transparency of our monetary policy to be enhanced through the use of this policy tool, the risk that the central bank ’ s credibility may instead be threatened due to inaccurate economic forecasts is emerging. since we have more difficulty than advanced economy central banks in forecasting the economy, attempting to carry out this policy is a great challenge to us, and this is another reason why the urgent need to develop our economic forecasting ability is materializing. i have