are also quite stark ( graph 1 ). most notably, there has been a marked increase in the share of deposit funding. over the past three years, banks'deposit funding has grown by about 15 per cent per annum. as a result, deposits have also increased by about 9 percentage points as a share of overall funding liabilities. there has been strong growth in deposit growth from households as well as businesses. the former reflects the increased saving rate of the household sector, much of which has flowed to the banking sector. the latter partly reflects the strong growth in bis central bankers ’ speeches corporate profits, particularly in the resources sector. 7 while growth in business deposits has been considerably faster over the past 12 months, household deposit growth has still been a very robust 9 per cent. through late 2009 and early 2010, the strength of growth in deposits reflected, in part, the intense competition amongst the banks for deposits. 8 this saw the yield on deposits rise markedly as the reserve bank has documented in its regular output over the past few years. but that competition appears to have levelled off in recent months, yet deposit growth has still continued at a robust pace. i would characterise the recent growth as being more an endogenous counterpart to the change in the growth and funding composition of the economy as a whole. one might expect that robust endogenous deposit growth to continue for some time yet. graph 1 there has also been a significant drop in the share of short - term wholesale funding, reflecting regulatory and market pressures. the share of long - term wholesale funding has correspondingly risen, as banks have sought to term out the maturity of their liabilities. one noteworthy development that has generally escaped attention is that banks have raised less of this wholesale funding from offshore than has matured over the three of the past four quarters. that is, in net terms, the banks have been repaying their foreign liabilities. the australian banks'use of offshore funding sources was particularly visible through 2009. they were a relatively large share of global bank debt - funding in that year, but that as much reflected the decrease in the number of highly rated institutions, as well as a lack of borrowing by other banks around the world through that period, as it did a pick - up in borrowing by the australian banks. ( that is, it was as much a function of the denominator shrinking as the numerator growing. ) the australian banks are a much smaller share of the debelle g ( 2011 ),

remains for the economy to grow strongly over the next few years. the quarterly gdp outcomes in the near term are, however, going to be materially affected by the recent extreme weather events. these events significantly disrupted production in both the december and march quarters, especially in the coal industry. the bank ’ s current estimate – which remains subject to significant qualifications – is that total output in the march quarter will be around 1 per cent lower than it otherwise would have been. given this mainly arises from a disruption to production, the decline in spending is likely to be somewhat smaller than 1 per cent. following the march quarter, we expect a strong rebound in output, as coal production recovers its fall and the rebuilding effort gets underway. over 2011, our current forecast is for the economy to grow by around 4¼ per cent. this is higher than we were expecting three months ago, although this upward revision just reflects a lower starting point because of the decline in coal production in december 2010. beyond the current year, our central scenario remains for the economy to grow in the 3¾ – 4 per cent range. the recent extreme weather events will also have a noticeable effect on the near - term outcomes for inflation. since the smp was released we have been able to make a preliminary assessment of the likely effects of cyclone yasi, primarily on banana and other fruit and vegetable prices. the bank now expects cpi inflation to be around 3 per cent over the year to june 2011, with the combined effect of floods and the cyclone likely to contribute bis central bankers ’ speeches around ½ percentage point to this outcome. this forecast represents an upward revision to the one published in the smp, largely because of the expected increase in banana prices. of course, with the price of bananas expected to fall back to more normal levels later in the year as production recovers, there is a period during 2012 when the year - ended inflation outcomes can be expected to be lower than at the time of the smp. looking through these weather - related effects, inflation is expected to gradually increase over the next couple of years to around 3 per cent in late 2012. finally, as always, these forecasts are subject to a number of uncertainties. as is the bank ’ s usual practice, we will continue to examine the ongoing flow of data on the global economy, domestic activity and prices and assess whether the outcomes remain consistent with our broad outlook. as i said at the outset, developments in global commodity markets and the attitudes of australian consumers