investor credit outstanding as reported in each of may, june and september this year. the cumulative effect of the upward revisions has been to increase the stock of investor credit outstanding by around $ 50 billion, or 10 per cent. according to these new data, investor loans now account for 40 per cent of total housing loans outstanding, not the 35 per cent reported earlier in the year. bis central bankers ’ speeches graph 1 click to view larger while the reasons for some of these earlier errors have been identified, in other cases the reasons are unclear and lenders have not been able to provide comprehensive back data. as a result, when calculating growth rates for investor and owner - occupier credit, the rba has had to make adjustments for what are effectively breaks in the series. the second data issue has emerged over the past couple of months and has worked in the other direction, with lenders reporting that some loans that were previously recorded as investor loans were really loans to owner - occupiers. this is partly because, when faced with the higher interest rate on investor loans, some borrowers have indicated to their bank that they are not an investor, but rather an owner - occupier, and so should not have to pay the higher rate. our liaison with lenders suggests that further reclassifications of this nature could be expected over coming months. the effect of these recent reclassifications on measured growth rates can be seen in graph 2. taken at face value, the data suggest a very sharp slowing in growth in investor credit and a sharp pick - up in owner - occupier credit ( shown as the dotted lines ). however, if we make adjustments for these reclassifications then the changes in growth rates are much less pronounced ( the solid lines ). graph 2 click to view larger bis central bankers ’ speeches these various data problems have reinforced our view that the supervisory focus on investor lending has been entirely appropriate. and it is disappointing that some lenders ’ internal systems have not been up to the task of reporting accurate data on the split between investor and owner - occupied housing loans. this issue was discussed at the most recent meeting of the council of financial regulators, with council members considering what steps could be taken to improve the quality of data. among other things, it has been decided that apra, the rba and the australian bureau of statistics will, next year, undertake a thorough review of the data collected from authorised deposit - taking institutions regarding their

in the face of a variety of shocks would tend to give better answers, and the short answer is “ no ”. “ non - traded inflation ( and unit labour cost growth ) rules appear to generate at least as much variability in output and aggregate inflation - it is aggregate inflation that we care about - without any significant reduction in interest rate variability ” ( ryan and thompson 2000 ). these same issues were examined by larry ball ( 2000 ). he is attracted to the idea that “ optimal rules in open economies differ considerably from optimal rules in closed economies. in open economies, stability is best achieved by targeting “ long - run inflation ” - a measure of inflation adjusted to remove transitory effects of exchange rate movements ”. but this is just another way of stating the intuition with which this section opened - that in the face of temporary exchange rate shocks, the authorities should not react but in the face of a permanent or structural change in the exchange rate, they should. the trick is knowing, as the exchange rate moves, whether it is temporary or structural. in practice, it would seem sensible to assume that at least some of the movement is structural, or at least will last long enough to either damage price expectations, or affect economic activity ( too much expansion, in the case of a depreciation ). so i am not sure that the ball rule has advanced us much past the intuition. the damage done by short - term exchange rate movements may change over time, and be regime - dependent : “ it is also important for central banks to recognise that, as is the case for most economic relationships, the passthrough from exchange rate changes to prices is likely to be regime - dependent. after a sustained period of low inflation with effective, as opposed to fictional, exchange rate flexibility, the informational content of the exchange rate in the expectationsformation process and price - setting practices of households and firms is likely to fall. thus, the widespread view that a currently high passthrough from exchange rate changes to prices is a barrier to successful inflation targeting is probably exaggerated ” ( mishkin and savastano 2000, pp 56 - 57 ). after all, in this world, there is no point in wiping out the real effect of the exchange rate change, because we are assuming that this is reflecting some long - term fundamentals, to which the economy should be adapting. but perhaps this is the important point to make - we still need to use intuition, and common sense, in