When we are not forthcoming on specifying the conditions, the market starts speculating on them, thereby raising the “noise” to message ratio. 62. Despite these challenges, in the Reserve Bank, our experience with greater openness has been quite positive. We found that effective communication can be a powerful tool provided the central bank has credibility. 63.
As these examples suggest, the demand for property today depends not only on current supply-demand conditions, in particular on the availability of credit, but also on buyers’ expectations of future prices. Of course, these in turn depend on, among other things, the availability of mortgage credit in the future.