of policy measures introduced over the past year has helped build that bridge. having already put that package in place, our assessment was that fiscal policy is the more effective policy instrument in responding to the delta outbreak. this is because fiscal policy can use the public balance sheet to offset the hit to private incomes during the lockdowns. in contrast, monetary policy works mainly on the demand side and the effects on income are felt with a lag ; realistically, there is little we can do to offset the hit to demand in the september and december quarters. this is the role of fiscal policy and indeed there has been a sizeable and welcome fiscal response. a third and related issue we considered was that by continuing to purchase government bonds at the rate of $ 4 billion a week we will be adding to the support provided to the economy during the recovery phase. the evidence suggests that the expected stock of central bank bond purchases matters more than how many bonds the central bank buys each week. by february, our cumulative purchases under the bond purchase program will have amounted to $ 275 billion. we will hold around 35 per cent of the australian government bonds on issue and 18 per cent of the state and territory bonds. the rba's purchase program started later than that of most other central banks but recently https : / / www. rba. gov. au / speeches / 2021 / sp - gov - 2021 - 09 - 14. html 10 / 14 9 / 14 / 21, 1 : 55 pm delta, the economy and monetary policy | speeches | rba has been expanding faster relative to the stock of bonds outstanding ( graph 9 ). this represents a substantial and ongoing degree of support to the economic recovery. graph 9 central bank government bond holdings * per cent of eligible stock outstanding % % japan sweden uk euro area * * us canada australia nz * * * central government debt only for all countries except the euro area. dashed lines represent forecasts based on announced purchase programs, recent pace of purchases, or market expectations in the case of us and canada holdings data for euro area only include bonds held as part of asset purchase programs ; holdings for other central banks also include bonds held for operational or liquidity purposes sources : central banks ; debt management offices ; rba ; refinitiv i would now like to turn to the more traditional part of our monetary policy package – that is, the setting of the cash rate. as i have discussed on previous occasions, last year we moved to an approach under which actual inflation

, rather than forecast inflation, plays the more central role in our cash rate decisions. in today's low inflation world we do not want to run the risk that we increase the cash rate on the basis of a forecast that ultimately does not come to pass, leaving inflation stuck below the target band. we want to see actual results, not forecasted results, before we lift the cash rate. once we do see these results, forecasts of inflation will again have a role to play. but we have to get there first. in particular, the board has said that it will not increase the cash rate until actual inflation is sustainably within the 2 – 3 per cent target range. it won't be enough for inflation to just sneak across the 2 per cent line for a quarter or two. we want to see inflation around the middle of the target https : / / www. rba. gov. au / speeches / 2021 / sp - gov - 2021 - 09 - 14. html 11 / 14 9 / 14 / 21, 1 : 55 pm delta, the economy and monetary policy | speeches | rba range and have reasonable confidence that inflation will not fall below the 2 – 3 per cent band again. our judgement is that this condition for a lift in the cash rate will not be met before 2024. meeting this condition will require a tighter labour market than we have now. our assessment is that wages will need to be growing by at least 3 per cent. we remain well short of this. even in industries where there has been strong demand for labour, wage increases remain mostly modest. this assessment was confirmed by the latest reading of the wage price index, which showed an increase of just 1. 7 per cent over the year to the june quarter, with wages growth slower than this in the public sector ( graph 10 ). graph 10 wage price index growth % private sector % public sector year - ended quarterly source : abs our judgement is that it will take some time for wage increases to lift to a rate that is consistent with achieving the inflation target. there is a lot of inertia in the wage - setting process and the experience of the past decade is unlikely to be reversed quickly. this inertia comes from among other things : multi - year employment contracts ; a strong cost - control mindset of australian business ; and low and stable inflation expectations. this judgement stands in contrast to the expected path of the cash rate implied by market pricing ( graph 11 ). the current