, 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

of the united states'great relative size and comparatively low degree of exposure to outside economic forces, foreign economic developments generally did not have material consequences on the u. s. macroeconomy. moreover, international financial flows moved through only a few established channels. exchange rates for the dollar with respect to major currencies were fixed in a system in which the united states enjoyed the " exorbitant privilege " of being the reserve currency. in effect, the united states was the " nth " country in the global economic system, meaning that u. s. economic preeminence implied that policy - - including monetary policy - - could be set essentially independently of the global economy ; our trading partners would have to react to the downstream consequences of u. s. developments. the recovery of our trading partners from world war ii, the development of more - sophisticated financial markets, the growth of trade, and the desires of other countries to pursue policies independent from those of the united states strained to the breaking point the exchange rate system put in place at the end of the war. in the early 1970s, we shifted from fixed exchange rates under the bretton woods system to the present arrangements, in which the dollar's value against major currencies is set by market forces. this change and the steady trends toward greater openness and integration that i described earlier have exposed our economy more directly to the effects of foreign developments. swings in business cycles abroad, disruptions to the supply of imported goods like oil, and variations in exchange rates have left their imprint on the u. s. economy over the past thirty years. importantly, the fallout from such shocks has not been restricted to its effects on our trade in goods and services ; for some disturbances, links through the financial sector have been an important avenue of transmission. in the late 1990s, for example, financial crises in asia, latin america, and russia created serious disturbances in the global financial system, posing new challenges for u. s. monetary policy makers. although foreign shocks have been more noticeable as we have become more globalized, greater openness has probably not made our economy more volatile on balance. the reason is that the external sector also acts as a buffer for shocks that arise domestically. for example, a change in domestic demand should have a smaller effect on gross domestic product, employment, and prices in an open economy than in a closed one because some of its effect will fall on imports - - through changes in income or the dollar '