now - although there are some encouaging signs - frankly no - one can know the answer to that question with any great confidence - we are not blessed with perfect foresight! as the imf says in one of its documents prepared for the recent meetings : “ striking the right balance for monetary policy in this environment is a difficult challenge. ” well you can say that again! it is hardly surprising against this background that there should be disagreement within the monetary policy committee as to whether or not a marginal further tightening of monetary policy is necessary - in fact i would normally expect there to be disagreement when we are close to where we need to be. but we are all unambiguously clear about where we need to get to in terms of inflation, and it is unrealistic in the circumstances - indeed in any circumstances - to expect us to say what will happen to interest rates in the future. mr. chairman, the overall prospect for the world economy - and indeed our own domestic economy - is for continuing growth with low inflation, and we do i think have a clear vision of where we want to go and the policies to take us there. but there are certainly a number of immediately painful blackspots - internationally and here at home - and there are some formidable rocks and potential whitewater further ahead. navigating through them will not be easy. i only hope that our snail is able to swim.

- third of the cpi basket and can be split into two broad categories. the first is what can be described as market services. these are services for which pricing tends to be market - based. this includes household services such as hairdressing, financial services, and meals out & takeaway. the prices of market services are generally driven by domestic factors such as wages, commercial rents and utility prices. there is little or no competition from imports and they are not affected by movements in the exchange rate. the second category is administered prices. these are the services for which prices are at least partly regulated, or for which the public sector is a significant provider. this includes services such as health, education and child care. it also includes utilities, which i will talk about separately. market services labour costs comprise about 40 per cent of final market services prices, which means that wages growth is a key determinant of the pace of market services inflation. market services inflation and wages growth were both growing strongly in the run - up to the terms of trade peak in 2011 ( graph 12 ). more recently, wages growth has been subdued, and this has been a significant factor contributing to the slower pace of market services inflation. http : / / www. rba. gov. au / speeches / 2018 / sp - dg - 2018 - 08 - 22. html 14 / 23 22 / 08 / 2018 low inflation | speeches | rba graph 12 there have also been a number of idiosyncratic developments that have weighed on market services inflation in recent quarters. this includes the removal of some atm withdrawal fees in september 2017, the introduction of a ctp green slip refund scheme in new south wales in december 2017, and the introduction of the active kids sports participation program in new south wales in january 2018. notwithstanding these one - off developments, the outlook for market services inflation is intrinsically related to the outlook for wages. the bank's forecast is that, as the labour market continues to tighten, wages growth should gradually pick up, and along with that we would expect market services inflation to also increase. however, as we have noted on a number of occasions, there is considerable uncertainty about the extent of unutilised capacity in the labour market and how quickly a reduction in spare capacity would translate into higher wage and price inflation. it is possible that the unemployment rate could fall faster than expected and wages growth could pick up more strongly as a result. alternatively, it is possible that the flow