redirected to other areas, including electrical goods, homewares and home renovations. online spending also surged, increasing by 70 per cent over the past year ( graph 3 ). these changes in our spending patterns have been challenging for many businesses, but the ability and willingness of australians to keep spending has helped the overall economy. graph 3 still quite a way to go my third observation is that despite the positive economic news over recent months, we still have quite a way to go. there is still very substantial spare capacity in the australian economy. the unemployment rate is higher today than it has been for almost 2 decades and many people can ’ t get the hours of work they want. and in terms of output, we remain well behind where we thought we would be when i spoke here in february last year ( graph 4 ). when the national accounts are published for the december quarter, they are likely to show that the level of gdp is 4 per cent lower than where we thought it would be a year ago. this is a big gap. graph 4 2 / 7 bis central bankers'speeches on the nominal side of the economy, there is also a fair way to go. in underlying terms, inflation is running at 1¼ per cent, well below the medium - term target of 2 – 3 per cent. and wage growth is the lowest in decades, with the wage price index increasing by just 1. 4 per cent over the past year ( graph 5 ). given the spare capacity that currently exists, these low rates of inflation and wage increases are likely to be with us for some time. graph 5 the year ahead this brings me to the year ahead. in my view, we can draw some comfort from the year just passed. our ability to pull together and the earlier - than - expected bounce - back are both positive developments and provide a basis for confidence about the future. yet even so, the path ahead is likely to be bumpy and uneven and it will be some time before we are back to full employment and have inflation back to the target. as was the case in 2020, much depends upon the path of the pandemic. the development of vaccines in record time is clearly good news. it has reduced one of the big uncertainties and could provide the foundation for a vigorous and sustainable recovery in the global economy. but this outcome is not assured – the global rollout of the vaccines faces challenges and there are a range of other uncertainties about the global economy, including trade

ensure a continuation of the rba ’ s monetary support for the australian economy. the fourth conclusion is that the term funding facility will be maintained as it is. banks are able to draw on the facility up until end june, which means they will have the benefit of low - cost funding out to mid 2024. the board would consider extending this facility if there were a marked deterioration in funding and credit conditions in the australian financial system. at the moment, there are no signs of this. fifth, the 3 - year yield target for australian government bonds will be maintained. this target has helped anchor the australian yield curve and reinforced our forward guidance regarding the cash rate. later in the year, the board will need to consider whether to shift the focus of the yield target from the april 2024 bond to november 2024 bond. in considering this issue the board will be giving close attention to the flow of economic data and the outlooks for inflation and jobs. it has made no decision yet. the final conclusion is that the cash rate will be maintained at 10 basis points for as long as is necessary ( graph 14 ). the board has no appetite to go into negative territory and has done as much as it reasonably can with interest rates. before increasing the cash rate, the board wants to see inflation sustainably within the 2 to 3 per cent target range. meeting this condition will require a tighter labour market and stronger wages growth than we are currently forecasting. it is difficult to determine exactly when this condition might be met but, based on the outlook i have discussed today, we do not expect it to be before 2024, and it is possible that it will be later than this. so the message is : interest rates are going to be low for quite a while yet. the reserve 6 / 7 bis central bankers'speeches bank is committed to provide the support the economy needs as its recovers from the pandemic. graph 14 on that note, i wish you all the best for the year ahead. thank you for listening and i look forward to answering your questions. 7 / 7 bis central bankers'speeches