33 5. 58 - 1. 25 new zealand 2 - year fixed 6. 19 7. 79 - 1. 60 germany fixed ( > 10 years ) 4. 49 5. 33 - 0. 84 sweden variable 2. 16 4. 18 - 2. 02 * * * * sources : bloomberg ; thomson reuters ; national data * data : to april for australia, us and canada ; to march for uk and nz ; and to february for germany. * * in the uk, variable rate and 1 – 5 year fixed - rate loans account for approximately the same proportion of the market. in assessing the level of global interest rates, it is important to look not just at official rates, but at a broader spectrum of rates faced by borrowers. we don ’ t have data on housing rates going back 150 years, but it is clear that they are not at the very low levels of official rates. in most countries, including australia, they are around 1½ - 2 percentage points below their decade averages – that is, low, but not at extremes ( table 2 ). for corporate borrowers, interest rates are not unusually low. in fact, in most developed economies, interest rates faced by corporations in capital markets are, if anything, still a little above decade averages, due to the large increase in risk premiums ( table 3 ). table 3 : non - financial corporate bond yields * maturity 10 - year average current rate rate deviation from average australia 1 - 5 years 7. 29 6. 62 0. 67 united states 5 - 10 years 6. 59 6. 26 0. 34 canada 1 - 10 years 5. 37 5. 75 - 0. 38 united kingdom 5 - 10 years 7. 04 6. 43 0. 61 euro area 7 - 10 years 6. 00 5. 50 0. 50 new zealand 10 year * * 8. 66 7. 84 0. 83 * industrial corporates * * a - rated bonds sources : bloomberg ; merrill lynch other monetary measures let me now turn to the other unconventional measures central banks have undertaken. these are often grouped in the popular press under the generic title of “ quantitative easing ” or “ printing money ”, but they really fall into three distinct categories : • measures to add to banks ’ reserve balances ; • measures to reduce the term structure of interest rates ; and • measures to support specific credit markets and / or take credit risk onto central bank balance sheets. the us fed has coined the term “ credit easing ” 1 to

workers who would like more hours. there are also structural factors at work, arising from technology and competition that we have discussed at previous hearings. the fourth and related issue is the outlook for inflation. the cpi inflation rate – at 2. 1 per cent – is higher than it was a couple of years ago, but still below the medium - term average. strong competition in retailing from new entrants is holding down the prices of many goods and low wage increases are holding down the prices of many services. rent inflation is also at a very low level. working in the other direction over the past year has been higher prices for electricity, fuel and tobacco. we are expecting inflation to move gradually higher over the next couple of years as the economy strengthens. we remain committed to achieving an average rate of inflation over time of between 2 and 3 per cent. in the short term, though, we are expecting the headline rate of inflation to dip a little in the september quarter. utility prices have declined recently in some cities and policy changes are likely to reduce the measured price of child care. there have also been some policy changes at the state government level that will reduce other measured prices. collectively, these changes will help with cost - of - living pressures and free up income to spend on other things. from this perspective, these changes are good news. so these are some of the main issues we have been working our way through. as you are aware, the reserve bank board has held the cash rate steady at 1½ per cent since august 2016. this setting of monetary policy is helping support economic growth, allowing for further progress to be made in reducing the unemployment rate and returning inflation towards the midpoint of the target range. we have not sought to fine - tune outcomes, but rather to be a source of stability and confidence as the economy moves along this path. for most of this year, i have emphasised three points in communication about monetary policy. the first is that things are moving in the right direction. we are making progress towards full employment and having inflation return to around the midpoint of the target range, and further progress is expected. the second point is that if we continue to make progress, you could expect the next move in interest rates to be up. with the central scenario being for the economy to continue on its recent track, it is more likely that the next move in interest rates will be an increase, not a decrease. the last increase in the cash rate was back in