The intensity of the replacement effect of the interest rate is not great. How have the variables affecting private consumption developed in recent years? There has been a real increase of about 6 percent per year on average in income from labor, as a result of an increase in employment and in wages.
There was an increase in home prices and in the value of financial assets. Outstanding consumer credit (nonhousing credit to households) increased by 25 percent over the past three years, as interest rates declined.