activity compared to those in the united states. in addition, imputed rent does not represent households ’ actual expenditures and the existence of bias in its index has been pointed out due, for example, to the fact that the index does not incorporate deterioration in housing quality. given the limitations of respective price indexes in accurately grasping prices, i believe it is necessary to make a comprehensive assessment of price developments in the policy conduct, keeping in mind how the cpi is affected by factors such as the characteristics of its components, items on which households actually spend, and people ’ s perceptions of inflation. c. transmission effects of monetary policy and financial system stability before closing my remarks, i would like to briefly touch on the subject of the transmission effects of monetary policy and the financial system stability. the bank has been implementing qqe with the aim of achieving the price stability target of 2 percent. under qqe, naturally, the bank has been able to bring about various transmission effects on corporate financing conditions, financial markets, and a variety of asset markets. financial institutions have been advancing so - called portfolio rebalancing. while decreasing the amount of their holdings of japanese government securities ( jgss ), they have been increasing various risk assets including foreign currency assets. with qqe ’ s strong monetary easing effects, long - term interest rates have stably remained at extremely low levels. while this has brought down yields on financial institutions ’ interest - earning assets, firms ’ funding costs have declined substantially. moreover, through an improvement in economic activity bis central bankers ’ speeches and corporate profits, stock prices have been rising and real estate transactions have become active. all of these developments are effects that have emerged with the mechanisms that were intended with qqe ’ s introduction and basically can be regarded positively. to achieve sustainable economic growth with price stability, any large imbalances or overheating on the financial front should be clearly identified. in this regard, i believe that there have been no signs of financial imbalances or overheating to date. nevertheless, to ensure financial system stability under qqe, it is necessary to thoroughly examine, from a longer - term perspective and without holding a predetermined view, whether risks are accumulating in the financial system due to excessive strength in financial activity and overheating in economic activity. bis central bankers ’ speeches

10 / 4 / 2019 lumps, bumps and waves | speeches | rba speech lumps, bumps and waves luci ellis [ * ] assistant governor ( economic ) address to the ai group geelong – 4 october 2019 thank you to the ai group for the invitation to speak to you today. it's great to be in geelong. it's been a big week for the bank in victoria, with the board meeting in melbourne on tuesday and the governor's speech that evening. i don't plan to repeat what he said or speak in detail about the board's decision. rather, i'd like to take a step back and talk about some aspects of how the bank's economics team understand and interpret economic developments, so we can do the analysis that is an important input into the board's decisions. most of our job is interpreting recent data and using that to forecast the future. we lean heavily on our intellectual frameworks in economics for thinking about how economies work. but we also need to account for an array of special factors and big - picture trends that don't sit neatly in top - down, whole - economy models, such as standard economic forecasting models. so today i'd like to talk about how we handle special factors in our understanding of the economy. i'll also give some examples of the kinds of factors that have been relevant of late. how do we know if there is a special factor at play? one source of information is our liaison teams across the country. they meet with all sorts of organisations and groups to better understand these special factors and trends. [ 1 ] in many cases, the story behind the numbers is as important as the numbers. the ai group and many of its members have been generous partners in our liaison program for many years. we truly appreciate your insights into those stories. if you are facing some special factor, how do you make sense of it? you can get the story behind the numbers from the players on the ground. but how do you incorporate those insights into your view of the overall economic outlook? i'd argue that it helps to look at the basic shape of that special factor, so you can form a view about how it will play out. informally put, you need to work out if what you're looking at is a lump, a bump, or a wave. https : / / www. rba. gov. au / speeches / 2019 / sp - so - 2019 - 10