##a has had quite a bit to say about it. a misconception that we still see from time to time is that some people seem to think we have been concerned mainly about excessive rates of construction. construction has been very strong, and there may be over - supply in some areas. but our main concern has not been about the addition of 130, 000 to 150, 000 new dwellings each year. rather we have been worried by the market for the existing 7½ million dwellings and the way in which they were changing hands for higher and higher prices, with an associated build - up in debt levels. that is, we have been worried about the housing market as an asset market, and about the borrowing behaviour of participants in that market. the concern was not out of a desire to target house prices, but more over the potential risks to macroeconomic stability from a major boom - and possible bust - in the household sector ’ s main asset class. on the most recent readings, there has been a distinct softening in most of the major housing markets, with more than one data series showing an outright fall in prices in the march quarter in several cities. this was associated with a decline in the demand for credit, though on the most recent data that demand still seems very strong. house prices in brisbane and the gold coast declined a little on these measures, though not by as much as those further south. median house prices $'000 $'000 sydney gold coast melbourne brisbane source : australian property monitors in our judgement, this is a welcome development. while various fundamental reasons can be advanced for dwelling prices to have risen noticeably in the 1990s, it was hard to avoid the conclusion that strong speculative forces were at work over the past couple of years. that was not a healthy state of affairs and the sooner it passed, the better. it is just about impossible, of course, to predict with any precision how all of this will unfold from here. much will depend on what else is occurring in the economy. in individual cases, the extent of leverage will be very important. my own view is that the palpable sense of disappointment being felt by many leveraged investors in residential property is likely to grow further for the next year or so, possibly longer. for many owner - occupiers, on the other hand, a moderate decline in prices should not create major discomfort, in an environment of ongoing growth in employment and wages, as well as reduced taxes. in fact, it is hard

the mandate bis central bankers ’ speeches dashboard. of course, no contingency plan can ever be definitive. inevitably, the fomc will learn things that it did not expect to learn. and so there may be conditions that force the fomc to deviate from a chosen plan. however, having a public plan, and couching its decisions against the backdrop of that plan, will enhance federal reserve transparency, credibility, accountability and consistency. in may 2010, chairman bernanke stated, “ transparency regarding monetary policy … not only helps make central banks more accountable, it also increases the effectiveness of policy ”. 4 i agree completely with this sentiment. and i see a public contingency plan, based on the explicit use of metrics like the mandate dashboard, as promoting exactly the kind of transparency that chairman bernanke then described. thanks for listening. i ’ m happy to take your questions. see chairman bernanke ’ s may 25, 2010, speech, “ central bank independence, transparency, and accountability ”. bis central bankers ’ speeches