Compare the following two statements, and see if you can guess who the speakers are, when they made these speeches, and what they announced in them:
“[We are] concerned about the rate at which house prices are increasing and the potential risks this poses to the financial system and the broader economy. Rapidly increasing house prices increase the likelihood and the potential impact of a significant fall in house prices at some point in the future. This is particularly the case in a market that is already widely considered to be over-valued.” (Speaker One).
“… Some commentators have taken the view that the property market dynamics are worrying. My own view, thus far, has been that some rise in housing prices is part of the normal cyclical dynamic, that it improves the incentive to build, and that a price rise reversing an earlier decline probably isn’t something to complain about too quickly. Moreover, credit growth, at between 4–5 per cent per annum to households, and less than that for business, does not suggest that rising leverage is so far feeding the price rise. Hence it has been a little too early to signal great concern.” (Speaker Two)
The former is Graeme Wheeler, the governor of New Zealand’s Reserve Bank, on August 20th, in a speech in which he announced the introduction of controls on Loan to Valuation Ratios.
The latter is Glenn Stevens, the governor of Australia’s Reserve Bank, more than three months later (October 29), in a speech in which he announced bugger all.
Figure 1: Banks getting back to their old tricks – St George advertising 95 per cent LVR loans, George St Sydney, November 2013