also now expected to peak at a lower rate than previously – at a little below 8 per cent, rather than the 10 per cent expected three months ago. this upgrade to the near - term outlook is clearly welcome news. at the same time though, we need to recognise that the pandemic has inflicted significant damage on our economy. it will take time to repair that damage and it is highly likely that the recovery will be uneven and drawn out. in particular, we face the prospect of a long period of higher unemployment and underemployment than we have become used to. in the rba ’ s central scenario, job creation is slow over coming months and the unemployment rate is still around 6 per cent at the end of 2022. one consequence of this is that wages growth and inflation are both likely to stay very low. in each of the next two years, we are expecting annual wages growth of less than 2 per cent. and inflation, in underlying terms, is expected to be just 1 per cent next year and 1½ per cent in 2022. 1 / 5 bis central bankers'speeches given this outlook, the board judged that it is appropriate to take further steps today to support the economy. unemployment is a major economic and social problem that damages the fabric of our society. so, it is important that it is addressed. the board recognises that, in the context of the pandemic, the responsibility for job creation falls mainly on the shoulders of business and government. but the reserve bank can, and will, make a contribution too. today ’ s policy package does that and it builds on the contributions from our policy measures earlier in the year. today ’ s package has three elements. these are : first, a reduction in the cash rate target, the three - year yield target and the interest rate on new drawings under the term funding facility to 10 basis points, from the current 25 basis points. second, a reduction in the interest rate on exchange settlement balances to zero from the current 10 basis points. and third, the introduction of a program of government bond purchases. in particular, we are intending to buy $ 100 billion of government bonds over the next six months, purchasing bonds issued by the australian government as well as by the states and territories. together, these three elements represent a significant package. the lower interest rates and our plan to buy $ 100 billion of government bonds over the next six months will help people get jobs and support the recovery of the australian

philip lowe : today's monetary policy decision speech by mr philip lowe, governor of the reserve bank of australia, sydney, 3 november 2020. * * * good afternoon. the reserve bank board met this morning. it decided on a package of further measures to support the australian economy as it recovers from covid - 19. given the significance of this package, i wanted to explain in person what we are doing and why we are doing it and to answer your questions. at its core, today ’ s decision reflects the reserve bank ’ s commitment to do what we reasonably can, with the tools that we have, to support the recovery of the australian economy. the board views addressing the high rate of unemployment as a national priority and it wants to do what it can to support job creation. importantly, today ’ s decision complements government efforts to support the australian economy and to lower unemployment. when the virus first arrived on our shores, economic policy quickly turned to building a bridge to the recovery. this was the right strategy and this bridge has made a major difference to people ’ s lives, helping many people and businesses get through a very difficult period. this bridge was constructed through close co - operation by governments across australia, the reserve bank, the financial regulators and australia ’ s financial institutions. for the reserve bank ’ s part, we have kept borrowing costs low and the financial system very liquid and supported the supply of credit to the economy. this broad economic policy response and australia ’ s progress on the health front have meant that the australian economy is in a better shape than many others. while australians have experienced a severe recession, it has not been as bad as was earlier expected or experienced in many other countries. in light of this experience, we have recently updated our economic outlook, with the full details to be published on friday. these updated forecasts will contain an upgrade to the near - term economic outlook, although there are a number of factors weighing on the medium - term outlook, including lower population growth. on balance, both the recent household spending and employment data have been a little stronger than we were expecting. it now appears probable that gdp increased solidly in the september quarter despite the lockdown in victoria. and growth over the year to june 2021 is expected to be close to 6 per cent compared with an expectation of 4 per cent growth when we reviewed our forecasts three months ago. the fiscal support, including through the budget, has played an important role here. the unemployment rate is