the national recovery effort. the reserve bank is committed to continuing to provide the necessary assistance and will maintain stimulatory monetary conditions for as long as is necessary. we want to see a return to full employment in australia and inflation sustainably within the 2 to 3 per cent target range. these are our goals and we are committed to achieving them. an important element of our policy package is the cash rate target being set at what is the effective lower bound of 0. 1 per cent ( graph 11 ). the board will maintain this setting of the cash rate target until inflation is sustainably within the 2 – 3 per cent range. it is not enough for inflation to be forecast to be in this range. before we adjust the cash rate, we want to see actual inflation outcomes in the target range and be confident that they will stay there. this is an evolution from the approach earlier in the inflation - targeting regime, in which forecasts of inflation played a more central role in decision - making about interest rates. we continue to pay close attention to the forecasts, but we want to see actual inflation outcomes consistent with the target before moving the cash rate. graph 11 cash rate % % source : rba a question that investors have been grappling with recently is when will this condition for a higher cash rate be met? as i discussed earlier, over the past couple of weeks market pricing has implied an expectation of possible increases in the cash rate as early as late next year and then again in 2023. this is not an expectation that we share. for inflation to be sustainably within the 2 to 3 per cent range, it is likely that wages growth will need to be sustainably above 3 per cent. this is assuming that australia generates ongoing growth in labour productivity and that the profit share of national income does not continue to trend higher. currently, wages growth is running at just 1. 4 per cent, the lowest rate on record ( graph 12 ). even before the pandemic, wages were increasing at a rate that was not consistent with the inflation target being achieved. then the pandemic resulted in a further step - down. this step - down means that we are a long way from a world in which wages growth is running at 3 per cent plus. graph 12 wage price index growth * year - ended % % * excluding bonuses and commissions source : abs the evidence from both australia and overseas strongly suggests that the journey back to sustainably higher rates of wages growth will take

just as much about achieving the maximum possible sustainable level of employment in australia. unemployment is a major economic and social problem and the board places a high priority on a return to full employment. there is, inevitably, some uncertainty about exactly what constitutes full employment in our modern economy. over the past decade, the estimates of the unemployment rate associated with full employment have been repeatedly lowered both here and overseas. so there is uncertainty. but based on this experience, it is certainly possible that australia can achieve and sustain an unemployment rate in the low 4s, although only time will tell. as we progress towards full employment, we will be relying on the wages and prices data to provide a signal as to how close we are. the current signal is that we are still a long way away from full employment. consistent with the judgement that the condition for an increase in the cash rate is unlikely to be met before 2024, the bank remains committed to the 3 - year yield target. we are not considering removing the target or changing the target from 10 basis points. the board has, though, discussed the question of whether to keep the april 2024 bond as the target bond, or to move to the next bond – that is the november 2024 bond – later this year. if we were to keep the april 2024 bond as the target bond, the maturity of the yield target would gradually decline as time passes until the bond finally matures in april 2024. the board has not yet made a decision on this 15 / 17 question and will consider it again later in the year when it has more information about the economic recovery and the labour market. later in the year, the board will also consider the case for further extending the bond purchase program. we are prepared to undertake further bond purchases if that is required to reach our goals. until then, we remain prepared to alter the timing of purchases under the current programs in response to market conditions. we did this last week when liquidity conditions deteriorated and bid - ask spreads widened noticeably, and will do so again if necessary. at its recent meetings, the board has also discussed developments in the housing market, including the rising housing prices across most of the country. there are many moving parts at present : record low interest rates ; a shift in preferences towards houses and away from apartments ; strong demand for housing outside our largest cities ; large government incentives for first - home buyers and home builders ; and the slowest population growth in a century. time will tell as to