Positive growth in the market value of real estate supports credit growth, which at the same time contributes to inflating the value of real estate. When the resulting bubble bursts, the collateral underlying the credit loses value, impairing the lending and borrowing ability of lenders and borrowers, respectively.
I presume that these phenomena not only have become one of the factors behind reduced predictability of monetary policy and increased volatility in financial markets, but also have led to impairment of the credibility of the Bank’s monetary policy conduct.