GDP in 2010 contracted by 4.5%, due to a decline in private consumption by 4.5%, in public consumption by 6.5% and in gross fixed capital formation by 16.5%.
For this reason the Reserve Bank is looking closely at the use of LVR restrictions to address the growing housing market threat to financial stability. While all four of the macro-prudential instruments remain valid options, I will use the rest of my time to focus on LVR restrictions and how they would work.