that question, it ’ s worth noting that over the course of 2014 and 2015, effective rates on most loans tended to decline by more than the cash rate, reflecting both declining funding costs and increased competition to lend. for fixed rate mortgages and many business loan rates the fall was quite marked. the average rate on outstanding business loans, for example, fell by over 90 basis points during a period in which the cash rate fell by 50 basis points. even for floating rate mortgages, rates had fallen a bit more than the cash rate. the actions of those banks that have lifted mortgage rates over recent weeks reverse a little under half of this year ’ s decline for floating rate mortgages for owner - occupiers and have no effect, at this stage, on the 15 per cent of loans with fixed rates. for investors in housing, these actions and those a month or two earlier reverse the effects of this year ’ s monetary policy easing but, of course, this was the lending that had been growing most quickly. business loan rates have not risen. measuring across the total loan book, the recent actions are the equivalent of roughly half of one 25 basis point monetary policy change. they take back perhaps a quarter of the extent of interest rate easing seen since the start of this year, and a smaller proportion of the total easing in lending costs seen over the past two years. for mortgages, this increase is from the lowest rates that any current borrower will have ever seen. as it is, there are still a number of mortgage products with rates not much above 4 per cent, even a few advertising a “ 3 ” before the decimal point. we also note that a significant proportion of owner occupier households is ahead of schedule on mortgage repayments – in large part because these households did not lower their payments as interest rates fell. most of these households are unlikely to need to part with extra cash each month as a result of the recent interest rate changes. ( equally, many of these households were probably not boosting spending as interest rates fell, instead allowing their loan principal to fall faster. ) as for the general environment, according to business surveys conditions outside mining have been slowly improving, not deteriorating. so it is not as though the increases in mortgage rates are compounding the effects of a serious deterioration in economic conditions overall. could the “ shock ” value of the rises in mortgage rates itself lead to a significant change in that trend, gentle as it is, of improvement? while

such an outcome is perhaps conceivable, given the starting point and all the above considerations, it seems to me a bit of a leap to draw that conclusion. at this point, then, my preliminary assessment is that the macroeconomic effect of these actions in themselves may not be large. it is one part of a much bigger and evolving landscape. nonetheless, the reserve bank board will keep this matter, and that broader landscape, under careful review. let me be clear that in making these comments i am not offering an endorsement of the banks ’ actions. nor should an assumption that shareholder returns must not decline as a result of the effects of supervisory measures, or any other factor, simply be accepted without question. the “ right ” rate of return for bank shareholders is, as others have observed, an open question. it is not a constant of the universe. bis central bankers ’ speeches returning then to the general theme of “ where are we, six years on? ”, my next observation is that many of the points that were being made at that time remain as relevant today as they were then. the australian economy ’ s exposure to china has increased, as was understood then. so china ’ s prospects matter more. the current rate of growth of the chinese economy is uncertain, as is its future growth rate. chinese policymakers are attempting a profound transition in the growth model while dealing with some legacy issues ( such as a substantial debt build - up ) arising from the previous model. it is likely that the marginal steel intensity of china ’ s growth will be lower in future than in the past. some suggest that chinese steel consumption, which has fallen this year, may continue to do so. at the same time, the marginal propensity of the chinese people to consume services is rising noticeably. so the challenge for australian resource producers to be the most efficient suppliers in a world of slower growth in demand for resources will co - exist with greater opportunities for other firms to offer value added in services. the challenges of adjusting the responsiveness of our economy and developing its infrastructure, noted six years ago, are still relevant. to say this is not at all a suggestion that nothing has been done in the interim, but the importance of productivity performance for growth in living standards has become progressively clearer as the terms of trade have fallen. the effects of population ageing, moreover, while slow moving, are now occurring. there is perhaps more of an edge in the productivity discussion just lately, as there should