met with the committee, though commodity prices are lower. looking ahead, forecasters expect a bit less growth in the global economy this year than they did a few months ago. expectations for australia ’ s trading partner group itself are for growth to be a bit below average, little changed from six months ago. inflationary pressures globally look quite subdued. global interest rates will still be very low, even if short - term rates move up a bit further in the united states. for australia, the adjustment we have been experiencing for a couple of years now will most likely continue. the terms of trade are still falling. the fall in mining investment spending will continue for at least one more year, though it is probably having its most significant effect on the rate of growth now. other areas of demand are expected to add to growth. the net effect of all this is likely to be continuing expansion at a moderate pace. one key question will be whether the recent financial turbulence itself will have a material negative effect on aggregate demand – in australia or abroad. i don ’ t expect that we will be able to answer that question for a little while yet. another question is what the recent unexpected strength in the labour market means for the outlook. if it turns out that the strength is just temporary, then the outlook is still for moderate growth, but no near - term acceleration. if, on the other hand, recent trends were to continue, the income gains coming from higher employment may start to feed into stronger demand growth, which would probably lead in due course to higher levels of investment. alternatively, if demand growth were to be in areas that require relatively little capital to support the labour employed, then the apparent weakness in capital spending outside mining could be of less concern anyway. as usual, there are many questions regarding both our current circumstances and the outlook. at its recent meetings, the reserve bank board has kept the stance of policy unchanged, with the cash rate at 2. 0 per cent. we will be examining new information over the months ahead as we try to discern the answers to these and other questions. with inflation unlikely to cause a problem by being too high over the next year or two, the statement after the recent meeting indicated that the board retains the flexibility to ease further, should that be helpful. bis central bankers ’ speeches

glenn stevens : summary of economic developments during 2015 and outlook for australia opening statement by mr glenn stevens, governor of the reserve bank of australia, to the house of representatives standing committee on economics, sydney, 12 february 2016. * * * chair members of the committee since the committee ’ s previous meeting in september, we have continued to see evidence that economic activity outside the resources sector has been gradually improving. the pattern observed six months ago whereby business surveys were suggesting improving conditions by and large continued through to the end of the year. inevitably, this expansion is not uniform across the country or across industries. areas that led the growth dynamic a few years ago are on the trailing edge now. conversely, some that were subdued for a few years are among those leading growth today. but few, if any, expansions are completely even, either geographically or by industry. given the nature of the economic events through which we have been living, moreover, it is not surprising that there are differences. the good thing is that there are strong areas to counteract the weak ones. the available information suggests that real gdp is expanding at pace a bit lower than what we used to think of as normal. our estimate is that growth over the four quarters of 2015 was about 2½ per cent. this continued expansion has occurred in the face of a very large contraction in capital spending in the mining sector, restrained public final spending and the reduction in national income coming from the declining terms of trade. it has been helped by easy monetary policy and the lower exchange rate. notwithstanding below - average gdp growth, the demand for labour increased at an above average pace in 2015. the number of people employed, as measured, increased by well over 2 per cent, participation in the labour force picked up and the rate of unemployment declined, to be below 6 per cent. that is a noticeably better outcome than we expected a year ago. this poses the obvious question of how, with apparently still somewhat below - trend gdp growth, the rate of unemployment has fallen. and whether the pattern will continue. of course, it may be that the labour force data overstate the strength. alternatively they may be telling us something not yet apparent in the gdp estimates. more data may shed light on this question over time. part of the reconciliation appears to be that growth has been concentrated somewhat in labour - intensive areas, like certain household and business services. another part of the reconciliation probably lies in the very modest pace of growth of labour costs. at any given rate