electricity prices in some cities have declined recently after earlier large increases, and changes in government policy are likely to result in a decline in child care prices as recorded in the cpi. there have also been changes to some state government programs that are expected to lead to lower measured prices for some services. together, these changes mean that our forecast for headline inflation for 2018 is now 1¾ per cent. looking beyond these short - run dynamics, inflation is still expected to rise as the economy moves closer to full employment. the labour market is gradually tightening and it is reasonable to expect that this will lead to a lift in both wages growth and inflation. this tightening of the labour market is evident in the steady increase in job vacancies, with the number of vacancies, as a share of the labour force, at the highest level in many years ( graph 15 ). it is also evident in the increase in the number of firms reporting that it is difficult to find workers with the necessary skills. as expected, the tighter labour market is leading to higher wage outcomes in certain pockets of the labour market. over time, we expect that this will become a more general story, although this is going to take some time. graph 15 https : / / www. rba. gov. au / speeches / 2018 / sp - gov - 2018 - 08 - 08. html 16 / 18 8 / 8 / 2018 demographic change and recent monetary policy | speeches | rba in terms of the financial risks facing the economy, things have also been broadly moving in the right direction. for a number of years, risks were rising due to the nexus of high and rising levels of debt and escalating housing prices. over the past year, though, housing price declines in the largest cities have reversed a small part of the earlier gains. borrowing by investors has also slowed considerably, largely because of reduced demand by investors. there has also been a tightening of credit standards. while banks are competing strongly for customers with low credit risk, their appetite to lend to riskier borrowers has lessened a bit. some of the non - bank lenders are providing credit to these borrowers. this change in financial trends has helped reduce the build - up of risk. it is helpful that this change is taking place at a time when the world economy is growing strongly, the unemployment rate is trending lower and the economy is recording good growth. this is assisting with the adjustment and means that, notwithstanding the changes in the housing market,

- content / uploads / chief - scientist - submission - to - senate - inquiry - intoaustralias - innovation - system1. pdf ; and ceda ( 2013 ), “ australia adjusting : optimising national prosperity ”, november. available at http : / / www. ceda. com. au / media / 338287 / cedaaustadjusting _ web. pdf. bis central bankers ’ speeches responsibility for the g20 now passes to turkey. we can bask in the glow of success for a few weeks and then get on to other matters. the point simply is that this has gone well as a result of the determined efforts of a range of people who were clear about what they wanted to achieve and who mobilised the necessary resources and effort to get there. one other result of australia ’ s leadership of the g20 is that the whole issue of infrastructure is well and truly on the table. no one doubts the need for infrastructure provision and it has clear economic attractions. spending on infrastructure supports aggregate demand during construction but, if done well, also augments the economy ’ s supply capacity for the long run. it is also clear from the various discussions over the past year that there is not a shortage of capital in global markets to fund infrastructure projects. the issues to be overcome don ’ t include finding the money. they concern appropriate project selection criteria, long - term planning, governance, contract design, appropriate risk sharing between public and private sectors, pricing usage of the infrastructure and so on. there is an opportunity here, including for australia, to do something of value over the years ahead. of course, we will need to be serious and to put in the effort over an extended period – in all the above areas. if we don ’ t put in that effort, not much actual infrastructure will be delivered. but if we are serious, a lot could be achieved. i imagine that the committee for the economic development of australia would be keen to be involved. conclusion i have reached the limits of our time this evening. australia ’ s economy is continuing to grow, moderately. it has been responding in ways you would expect to the remarkable set of circumstances it has faced over the past decade. there is continuing adjustment ahead and doubtless no shortage of challenges. but beyond these challenges of the next couple of years, maximising our economic possibilities in the modern world requires sustained efforts at adaptation and innovation, at doing things better and, perhaps most of all,