in the aftermath of the crisis. fifth, our framework is designed to avoid spiral dynamics between house prices and credit volumes. since the mortgage measures were initially flagged in late 2014, there has been a sharp moderation in expectations for annual gains in house prices, since it is widely understood that persistently - high rates of increase in house prices are not likely in a system in which measures place ceilings on lti and ltv ratios. moreover, our macroprudential regulations can be tightened if there is emerging evidence of elevated risks in the mortgage market. finally, it is important to appreciate that many factors influence the dynamics of house prices. while rising incomes typically might support some gain in house prices, the prospect of future expansion in housing supply and tightening in the global funding conditions for lenders are significant factors that may place downward pressure on house prices over the medium term. the range of uncertainty about the future path for house prices is an important risk factor that motivates the need for ceilings on lti and ltv ratios. these refinements will improve the design of the framework and will take effect from january 1, 2017. looking to the future, the revised framework should require adjustments only if there are material 3 / 4 bis central bankers'speeches changes to the macro - financial environment that require a tightening or loosening of these measures. it is important to appreciate that saving a deposit for a house is a basic requirement that ensures better long - term outcomes both for the borrower and the lender, in terms of more affordable mortgages and lower credit risk. everybody gains from the prudent borrowing and lending patterns that are essential for a stable financial system : our mortgage measures are designed to deliver this objective. 4 / 4 bis central bankers'speeches

government ’ s goal for a long time. it is, therefore, encouraging to see inflation coming down in recent months, reaching a single digit level of 9. 4 %, in april 2006 and dropping further to 8. 6 % in may 2006. ladies and gentlemen, accounting for this favourable out - turn in inflation was appropriately tight monetary policy, aided by prudent fiscal policy and the relative strengthening of the kwacha. the bumper maize harvest this season has helped to ease pressure on food prices and to keep food inflation and thus overall inflation low. to ensure that inflation remains low and stable, it is imperative to continue maintaining a tight monetary policy, prudent fiscal policy and a relatively stable exchange rate. in the government securities market, developments in yield rates were mixed in 2005. overall, the composite weighted average treasury bill yield rate stood at 16. 2 % in 2005, down from 17. 8 % recorded in 2004. in contrast, the composite yield rate on government bonds stood at 23. 0 %, up from 20. 9 % registered in 2004. as at may 29, 2006, the composite weighted average treasury bill yield rate came down sharply to 6. 5 % while the composite yield rate on government bonds declined to 11. 0 %. the sharp reduction in yield rates on government securities has been due to low inflation expectations, coupled with high demand for these securities by banks, the non - bank private and public financial institutions, and foreign portfolio investors. you may wish to know, your excellency, that there are no restrictions with regard to foreign participation in the government securities market. with continued improvements in the macroeconomic environment, investor confidence is heightened with foreign portfolio investment in government securities recording appreciable growth. foreign portfolio investments in government securities increased to k400 billion at end - december 2005 from k5. 6 billion at end - july 2005. distinguished ladies and gentlemen, with respect to developments in the money market, commercial banks lending rates have also been coming down, though not as fast as the decline in inflation and treasury bills rates. commercial banks nominal weighted average lending base rate declined from 29. 8 % in 2004 to 27. 6 % in 2005. as at may 30, 2006, the weighted average lending base rates stood at 22. 5 %. clearly, there is a need for commercial banks to do more to reduce lending rates in order to influence a substantial expansion of private sector credit. lower lending rates will contribute to the reduction in the cost of doing business