’ speeches in short, the country is prepared to face a somewhat less favorable external scenario next year, which undoubtedly will have effects on the domestic economy. for years we have built solid macroeconomic balances, which yield their fruit when adverse situations hit. we are confident that, in such a scenario, this will be no exception. our institutions, solid but flexible at the same time, distinguish us in the world. this allows us to look at the country ’ s future with calm and optimism. we as central bank will continue to contribute our own efforts to the stability of the currency and the normal functioning of the internal and external payment system, the development and welfare of the chilean population. thank you. bis central bankers ’ speeches figure 1 nominal exchange rate variation in 2013 ( * ) ( percent ) south africa india indonesia australia brazil turkey peru colombia malaysia philippines russia emerging asia chile new zealand latin america thailand other south korea poland emerging europe mexico hungary czech rep. bulgaria slovakia china - 5 ( * ) an increase denotes a depreciation. sources : central bank of chile and bloomberg. figure 2 gdp and final demand ( annual change, percent ) - 5 - 5 - 10 - 10 - 15 - 15 gdp domestic demand final demand source : central bank of chile. bis central bankers ’ speeches figure 3 inflation indicators ( annual change, percent ) - 2 - 2 - 4 - 4 - 6 - 6 cpi cpiefe source : national statistics institute ( ine ). figure 4 real exchange rate ( * ) ( index, 1986 = 100 ) ( ) g 90y rer 1998 - 2012 average 1993 - 2012 average ( * ) includes information up to 27 august. source : central bank of chile. bis central bankers ’ speeches figure 5 mpr and expectations ( percent ) fbs, second half august 2013 ees, august 2013 forward, september report mpr source : central bank of chile. table 1 international baseline scenario assumptions 2013 ( f ) mar. 13 jun. 13 report report gdp growth sep. 13 report 2014 ( f ) mar. 13 jun. 13 report report sep. 13 report 2015 ( f ) sep. 13 report ( annual change, percent ) trading partners'gdp 3. 4 3. 6 3. 4 3. 3 4. 2 3. 7 3. 6 4. 0 world gdp at ppp 3. 1 3. 3 3. 1 3. 0 3. 9 3. 6 3. 5 3. 9 united states eurozone japan china india rest of asia ( ex

21 / 02 / 2018 household indebtedness and mortgage stress | speeches | rba speech household indebtedness and mortgage stress michele bullock [ * ] assistant governor ( financial system ) address to the responsible lending and borrowing summit sydney – 20 february 2018 thank you for the opportunity to be here today. the title of the summit, ‘ responsible lending and borrowing – risk, responsibility and reputation ’, really struck a chord with me because there has been much discussion over the past few years about housing prices and the increasing debt being taken on by the household sector. the reserve bank's interest in this area springs from both its responsibility for monetary policy and its mandate for financial stability. from the perspective of monetary policy, high debt levels will influence the calibration of interest rate changes. the more debt households have, the more sensitive their cash flow, and hence consumption, is likely to be to a rise in interest rates. households with higher debt levels may also sharply curtail their consumption in response to an adverse shock such as rising unemployment or large falls in house prices, amplifying any economic downturn. my focus today, however, is on the potential risks to financial stability from this build up in debt. one of the key issues we have been focusing on is the extent to which rising household debt might presage stress in household budgets, with flow on effects to financial stability and ultimately to the economy. there has been a lot said and written about this issue in recent times, using a multitude of data sources and anecdotes. what i hope to do today is to put this information into some context to provide a balanced view on the current and prospective levels of household financial stress, and hence the implications for financial stability. i want to make a couple of points at the outset. the first is that there are clearly households in australia at the moment that are experiencing financial stress. by focusing on whether financial stress has implications for financial stability, i am not in any way playing down the difficulties some households are experiencing. there is a very real human cost of financial stress. second, some of the most financially stressed households are those with lower incomes which typically rent rather than borrow to buy a home. access to suitable affordable housing for this group is clearly an important social issue. but given the topic of this summit and the potential link to http : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 02 - 20. html 1 / 14