of late, requiring easier monetary policy to keep domestic demand elevated relative to domestic income. in the lower panel, chart 1 also gives some sense of the extent to which household investment has been carrying the economy. economic contractions have frequently been led by weakness in the household sector, which often has responded to higher interest rates as the federal reserve acts to reverse inflation pressures. this pattern can be seen in the chart, where the spending shares of housing and consumer durables typically drop sharply before and during recessions. in this episode, however, these shares have continued to move slightly higher, despite a pronounced drop in wealth and a weak economy. thus, household investment has stayed unusually strong throughout the recession and early in the recovery, buoyed, no doubt, by low interest rates. going forward : the benign scenario as a consequence, it is to be expected that stocks of interest - sensitive investment goods - in the present circumstances, especially cars and houses - are greater than they would otherwise be. and with demand for housing strong, it is perhaps not surprising that house prices are probably higher than they otherwise would be. but judging from the steep upward slope of the yield curve, few see interest rates as holding at current levels indefinitely. when, at some point, interest rates rise to more typical levels, desired stocks of these goods likely would fall, holding other factors equal, restraining this interest - sensitive spending. but it is important to remember that such an increase in interest rates would not occur in a vacuum ; it would occur because the economy looked to be growing more vigorously. most economists expect that a more pronounced step - up in the pace of activity will be brought about by a recovery in business investment from its current subdued levels. in that case, the need for high levels of spending on housing will be reduced. and higher interest rates will be instrumental in bringing about the adjustment in housing expenditures required to keep economic activity from overshooting its potential. in principle, a housing or durables boom induced by monetary policy need not entail a bust that would be painful to the economy. of course, it is not likely to occur as smoothly as that. among other things, markets could get it wrong for example, they could anticipate greater strength in underlying demand than is actually occurring. then, higher interest rates would tend to damp spending unduly. but there is an “ automatic stabilizer ” aspect to the interaction of financial markets and the economy. as investors realized their error, rates would fall back

picture terms, following the leadership core and keeping in alignment ”, strengthen “ confidence in the path, theory, system and culture of socialism with chinese characteristics ”, and uphold “ general secretary xi jinping ’ s core position on the party central committee and in the party as a whole as well as the party central committee ’ s authority and its centralized and unified leadership ”. moreover, we will thoroughly implement the guidelines of the fifth plenary session of the 19th cpc central committee and the 2020 central economic work conference, practice the new development philosophy at the new development stage, focus on promoting high - quality development, and pursue financial supply - side structural reform as our main task, so as to build a modern central bank system. we will also press ahead with our efforts to ensure “ six stabilities ” and “ six guarantees ” to provide strong and effective financial support for speeding up the building of a new development paradigm and commemorate the centenary of the founding of the party with remarkable achievements! 2 / 2 bis central bankers'speeches