, and to financial institutions ’ capital requirements and pricing criteria, which will make them more resilient to future shocks. accordingly, these policies will help mitigate financial stability risks over time. when it comes to housing activity and prices, the measures will weigh on demand, especially for more expensive houses. but demographic demand remains robust, job creation and income growth have been strong in the greater vancouver and toronto areas, and housing supply constraints continue to bind. there is a box in the fsr that describes the macroprudential measures that have been taken and how they might be expected to affect housing fundamentals. the important takeaway is that one cannot judge the effectiveness of these policies simply by observing whether house prices continue to rise. this is because the measures are aimed at mitigating risks to households and to the financial system, not at house prices per se. the effects of these policies will be greatest in vancouver and toronto, because that is where the majority of high loan - toincome mortgages are being granted. in this context, governing council noted that price increases have begun to slow noticeably in vancouver, but it is too early to determine the new trend. it is noteworthy that market activity began to slow before the imposition of the special tax on sales of homes to non - residents, which 1 / 2 bis central bankers'speeches suggests that other factors may have begun to interrupt the cycle of extrapolative price expectations. however, the situation remains highly uncertain, and we have seen no signs of a similar moderation in the toronto area. again, we must emphasize that a moderating housing market, as we have seen in calgary, for example, may ease financial stability concerns on one front, but leave the level of household debt at a very high level. governing council ’ s discussions of these risks were also influenced by the backup in global bond yields since the us election. canada ’ s bond yields have responded, as is typically the case, albeit in less than a one - for - one fashion. this has led to some increases in canadian mortgage rates. we will monitor these developments carefully in the months ahead. as we made clear in our recent interest rate announcement, we will continue to follow an independent monetary policy in canada, one aimed at returning inflation to our 2 per cent target. finally, there has been considerable discussion in financial markets about possible shortages of bond market liquidity. many have pointed to regulatory changes as contributing to this. at the same time, markets functioned exceptionally

other. indeed, the bsp has done quite a lot. even so, our tool kit is far from being exhausted. with the policy rate at 2. 25 percent and inflation well within target, there is room for further adjustment in the key rate. also, there is room to further reduce the reserve requirement. the monetary board earlier this year gave me authority to implement a 400 - bps cut in the reserve requirement for 2020. so far i have done a 200 - bps of cut in the rr for universal and commercial banks. let me be clear : the bsp is prepared to do more if warranted. the bsp remains committed to a disciplined - and evidenced - based monetary policymaking as it pursues its price stability objective. with the liquidity enhancement measures the bsp has implemented, we have so far injected over p1. 25 trillion – equivalent to 6. 4 percent of gdp – in liquidity to the financial system. still on market confidence, major indicators suggest that financial markets are responding well to our policy responses. the peso is the strongest currency in asia, recording a year - to - date appreciation of 4. 30 percent against the us dollar as of august 19. the philippine stock exchange index ( psei ) has rebounded from a low in the 4, 600 territory in march to 6, 042 on august 19. the philippines ’ 5 - year credit default swaps spread settled at 49. 2 bps as of august 19, much tighter than those of peers. confidence on the philippines is further cemented by favorable actions by credit rating agencies. 6 / 13 bis central bankers'speeches japan - based debt watchers japan credit rating agency and r & i raised the country ’ s credit rating by a notch to a minus, and triple b plus respectively. amid a wave of rating downgrades they have implemented worldwide, s & p, fitch, and moody ’ s affirmed the philippines ’ investment - grade credit ratings of triple b plus, triple b, and baa2, respectively, all with a stable outlook. let us now proceed to the second prerequisite to thrive in a crisis : adoption of a unified and coordinated approach among concerned entities. the timeless quote from helen keller perfectly captures the idea : “ alone we can do so little ; together we can do so much. ” in the case of the philippines, on a national level, there is a whole - of - government approach in addressing the pandemic and its effects.