While the growth-at-risk framework offers very important insight, we do not see this as the end state of how we would like to bring financial vulnerabilities into the discussion of monetary policy. In particular, this framework still involves a large element of judgment, as many of the relationships are estimated imprecisely.
Accordingly, in our current modelling efforts, we are looking to develop a framework that is more explicit about the mechanisms at play. One dimension we are particularly interested in exploring relates to the formation of expectations. Expectations often play a key role in the development of financial vulnerabilities. To illustrate, let me focus on house prices.