within our 2 – 3 per cent target range. the word ‘ sustainably ’ is important because it recognises that we need to look through temporary factors that influence the headline inflation rate from time to time. indeed, over the past year, part of the decline in headline inflation has been due to temporary factors such as electricity rebates and declining fuel prices. while these temporary factors have undoubtedly helped many australians, our approach is to look through them to some extent to better understand where inflation will settle in the medium term. graph 1 measures of inflation * % % headline ( year - ended ) trimmed mean * * ( year - ended ) trimmed mean * * ( quarterly ) - 2 - 2 * adjusted for the tax changes of 1999 – 2000. * * excludes deposit & loan facilities prior to the september quarter of 2011. sources : abs ; rba. the best way to do this is to look at underlying inflation. the measure we typically look at for this is trimmed mean inflation and by this measure, inflation was still too high at 3½ per cent over the year to the september quarter. while this is a welcome decline from 5. 1 per cent a year earlier, it is consistent with a situation in which the overall level of demand for goods and services in the australian economy has been outstripping its supply capacity for some time. we have maintained the cash rate at its current level of 4. 35 per cent for a little over a year now. this is 4. 25 percentage points above its emergency low level of 0. 1 per cent at the height of the pandemic. at this current level, we are of the view that monetary policy is restrictive. the effect of this is most evident in the household sector, with very weak growth in consumption, a decline in per capita consumption and very low dwelling investment. monetary policy settings will nevertheless need to remain restrictive until the reserve bank board is confident that inflation is on track to return sustainably within the target range and approach its midpoint of 2. 5 per cent. our forecasts published in the november statement on monetary policy suggest that a sustainable return to target will occur in 2026. elevated inflation indicates that the level of demand in the economy is above the ability of the economy to supply the goods and services demanded. but the evidence suggests that this gap is narrowing ( graph 2 ). one reason for this is that the rate of growth in demand has been quite subdued. the subdued rate of gdp growth, in turn, reflects

focus more on the big questions and risks to the outlook and monetary policy. we are actively encouraging a greater range of diverse perspectives and challenge to make sure we are turning over every stone ; a summary of those different ways of viewing the economy is provided in the board papers at each meeting. also, external board members now meet regularly with a wider range of staff to discuss topics relevant to their decision - making. this is just one way in which we are bringing to life our cultural vision for being open to ideas and dynamic in how we work. the briefings that board members receive now regularly include policy alternatives, scenarios, and discussion of the trade - offs between the rba ’ s objectives of low and stable inflation and full employment. we have drawn inspiration from peer central banks to enhance our practices, and they will continue to evolve as we learn what works well here and how we can do even better. the rba has always produced high - quality analysis and our staff are well respected for their expertise. but challenging questions lay ahead, and we are best placed to tackle them by continually reflecting on how we can do things differently and what we can learn from others. in this spirit, we are broadening – and deepening – our capabilities, our models and our engagement with people, ideas, and organisations outside of the rba. r e s e r v e b a n k o f au s t r a l i a one example of this is our new monetary policy strategy team, tasked with deepening our policy analysis by encouraging debate and collaboration, and harnessing know - how, from within and outside the rba. you will also have noticed changes in how we communicate. i have held media conferences after each of the board ’ s decisions this year, and these will continue next year. our publications are evolving too. the statement on monetary policy, which we publish four times a year, has been restyled to be more transparent about our forecasts and assumptions, and to give clearer explanations for our assessment of the economy and the risks around the baseline outlook. the financial stability review has also undergone a change, with a greater focus on clearer messages to explain our analysis. we will continue to develop these publications as we enhance our communications strategy. our transformation agenda our transformation goes beyond reshaping how we set monetary policy. in april last year, we launched a four - year transformation program based on the rba review findings. we set out to become a more open and dynamic central