I would therefore like to give you a brief overview of the kind of challenges central banks face when embarking on financial stability analysis. It starts with the fact that financial stability is not easily measured. This is hardly surprising as, in contrast to monetary policy analysis, there is no single indicator (such as inflation) to observe.
While it is not possible to pin the number down exactly, the evidence is consistent with an estimate below 5 per cent, perhaps around 4½ per cent. Given that the current unemployment rate is 5.2 per cent, this suggests that there is still spare capacity in our labour market.