how these various factors ultimately balance out, but history suggests that shifts in population growth can have large effects on the housing market. i would like to reiterate that the rba does not target housing prices, nor would it make sense to do so. i recognise that low interest rates are one of the factors contributing to higher housing prices and that high and rising housing prices raise concerns for many people. there are various tools, other than higher interest rates, to address these concerns, leaving monetary policy to maintain its strong focus on the recovery in the economy, jobs and wages. as part of this focus, we are continuing to pay close attention to lending standards, especially given the combination of low interest rates and rising housing prices. looser standards would increase mediumterm risks and add to the upward pressure on prices, so would be of concern. reflecting this, the council of financial regulators has indicated that it would consider possible responses should lending standards deteriorate and financial risks increase. we are not at this point, but we are watching carefully. conclusion i will conclude by briefly drawing the 3 themes together – the recovery, investment and the outlook for monetary policy. the full recovery of our economy requires a further lift in business investment. stronger investment will also boost our productivity and provide a firm basis for stronger growth in nominal and real wages. globally, higher levels of investment relative to savings are also one of the keys to a return to more normal levels of interest rates over the medium term. the australian economy is recovering from the pandemic and we expect this recovery to continue. we are also expecting further progress towards the rba's goals, although the journey back to full employment and inflation consistent with the target is likely to be a long one. the rba will maintain supportive monetary settings for as long as is required to achieve these goals. thank you for listening and i am happy to answer your questions. endnotes [ * ] i would like to thank ellis connolly for assistance in preparing this talk. this analysis uses data sourced from the australian bureau of statistics'blade ( business longitudinal analysis data environment ) database ( see blade ). the materials on this webpage are subject to copyright and their use is subject to the terms and conditions set out in the copyright and disclaimer notice. © reserve bank of australia, 2001 – 2021. all rights reserved. the reserve bank of australia acknowledges the aboriginal and torres strait islander peoples of australia as the traditional custodians of this land, and recognise

is important in determining the central bank ’ s reaction function, i think policymakers can strike the best balance between a monetary policy that fully incorporates the complexity of the world as it is, while, at the same time, retaining considerable clarity about how the fomc is likely to respond to changing circumstances. a formal policy rule such as the taylor rule misses this balance by going too far in one direction. what is important for attaining the federal reserve ’ s mandated objectives is not that monetary policy is described in terms of a formal prescriptive rule, but rather that the fomc ’ s intentions and strategy are well understood by the public. this argues for clear communication through the fomc meeting statements and minutes, the fomc ’ s statement concerning its longer - term goals and monetary policy strategy, the chair ’ s fomc press conferences and testimonies before congress, and speeches by the chair and other fomc participants. but it also is important that the strategy be the “ right ” reaction function. this means a policy approach that responds appropriately to important factors beyond the two parameters of the taylor rule – the output gap estimate and the rate of inflation. thank you for your kind attention. an analogy can be made to the applicability of a friedman k - percent monetary aggregate rule. just as a k - percent rule requires a stable relationship between a monetary aggregate and nominal gdp ( i. e., stable money velocity ), a taylor rule needs a stable relationship between the policy rate and financial conditions. bis central bankers ’ speeches