target for the debt - to - income ratio or the ratio of nationwide housing prices to income. as i spoke about earlier, there are good reasons why these ratios move over time. my judgement, though, is that, in the current environment, the resilience of our economy would be enhanced by an extended period in which housing prices and debt outstanding increased no faster than our incomes. again, this is not a target or a policy objective of the reserve bank, but rather a general observation about how we build resilience. many of you will be aware that these issues have figured in the deliberations of the reserve bank board for some time. this is entirely consistent with our flexible medium - term inflation targeting framework. with a medium - term target, it is appropriate that we pay attention to the resilience of our economy to future shocks. in the current environment of low income growth, faster growth in household debt is unlikely to help that resilience. we have also been watching the labour market closely. the unemployment rate has moved up a little over recent months and wage growth remains subdued. encouragingly, employment growth has been a bit stronger of late and the forward - looking indicators suggest ongoing growth in employment. we will want to see a continuation of these trends if the overall growth in the economy is to pick up as we expect. stronger growth in incomes would of course also help people deal with the high levels of debt and housing prices. overall, our latest forecast is for economic growth to pick up gradually and average around 3 per cent or so over the next few years. to conclude, i hope these remarks help provide some insight into the reserve bank ’ s thinking about housing prices and household debt. as household balance sheets have changed, so too has the way that the economy works. both from an individual and an economy - wide perspective, 13 / 14 bis central bankers'speeches we need to pay attention to how the higher level of debt affects our resilience to future shocks. thank you. i look forward to your questions. 1 when balances in offset accounts are taken into account, the recent rise in household debt is less pronounced, although the household debt - to - income ratio has still risen to a record high. 2 for rba analysis of this issue see kohler m and m van der merwe ( 2015 ), ‘ long - run trends in housing price growth ’, rba bulletin, september, pp 21 – 30 and rba ( 2003 ) ‘ household

mandate. in the case of equities, i believe that we cannot hold a strong conviction in either regard. the link between overnight reserves and prices of equities is too remote and indirect, and the impact of equity prices on the balance of aggregate supply and demand is too uncertain, for those prices to be a target of policy. to be clear, this is not an argument for never considering prices in asset markets when determining how well we are likely to do in achieving our goals. monetary policymakers follow developments in the equity and other asset markets as part of the process of evaluating and forecasting economic conditions. that is, the values of equity claims affect spending decisions and help forecast economic activity. but, in that regard, a similar role is played by many other important determinants of spending, including long - term interest rates, the foreign exchange value of the currency, the government's fiscal position, and economic activity abroad. we can employ our one instrument to temper or augment the net effect of changes in these factors on spending and production, but we do not have the tools to respond to each individually. our tool is most efficiently deployed to adjust overnight interest rates. there is a more general principle at work here. no doubt, the balance sheet of the federal reserve is large and the attention paid to our pronouncements intense. nobody would deny that central banks can be quite powerful and that monetary policy works, over time. but in the scheme of things, a central bank's ability to smooth asset prices ( if it wanted to ) or to buffer shocks to spending or production is somewhat limited. the textbooks teach that monetary policymakers can vary interest rates to offset fluctuations in aggregate demand. the reality is that when the shortfall in desired spending is large or arises quite quickly, as was the case last year when businesses slashed their investment plans in light of a perceived overhang of capital, the initial monetary policy offset can be only partial and not necessarily synchronous. eventually, of course, monetary policy does work ; but the lags continue to be unpredictable and both the level of rates and the time required for policy to have the desired equilibrating impact depend greatly on the force of the macroeconomic instability that must be confronted and are not knowable at the start of a cyclical event. similarly, the central bank can meet elevated demands for liquidity during times of crisis, but the private sector cannot look to the central bank to eliminate all risk, just