line with the forecasts, further tightening of monetary policy would be necessary at some point, the recent flow of data had not added any urgency to the need to adjust policy. accordingly, the cash rate continued to be held steady. at the time of the july meeting, global economic growth had eased, and the downside risks stemming from the european debt problems looked more significant. in australia, households remained cautious and the housing market was soft. also, it now appeared that the slow recovery in coal production would mean that earlier gdp forecasts for 2011 would not be met. nonetheless, the medium - term outlook for the australian economy remained strong. in these circumstances, the board continued to hold rates steady, noting that the cpi outcome to be published in the next month would provide an update on inflation. the state of the global and domestic economies had not changed much by the time of the august meeting, but the cpi outcome for the june quarter again surprised on the upside. price increases for a range of manufactured goods were larger than expected in light of the appreciation of the exchange rate and the ongoing caution among consumers. there was the possibility that the slower growth in productivity that had been evident for some years was pushing up unit labour costs at a pace faster than was consistent with the inflation target. at the august meeting the board therefore discussed whether there was a case to tighten monetary policy further. the general case to do so was that the economy was continuing to operate with relatively little spare capacity, and the staff forecasts showed inflation rising above target during the forecast period. on the other hand, activity in parts of the non - mining economy was subdued and downside risks to the global economy had increased significantly due to the volatility in financial markets. also, the softness in credit demand and the high exchange rate pointed to financial conditions exerting a reasonable degree of restraint. these considerations led the board to conclude that it would be prudent to continue to hold rates steady. summarising all this, the general pattern that has emerged over the past year has been as follows : first, the effects of the mining boom have turned out to be stronger than expected a year ago. the terms of trade are noticeably higher and forecasts for national income and mining investment have been revised up over the year. second, despite this strength in the mining sector, overall economic growth is turning out to be weaker. the forecasts published earlier this month reduced growth in gdp for 2011 to 3¼ per cent, versus 3¾

under the first purchase must be large ( i. e. a top - down staircase pattern of disbursement rather than the present bottom - up staircase pattern ) and the performance criteria must be relevant to deal with a capital account crisis ( implying less emphasis on conventional performance targets and complete avoidance of the saw - tooth problem ). since the imf would endorse the policy framework of a country before entering into a precautionary arrangement, repeated programme interruption and subsequent granting of waivers would need be avoided. overemphasis on “ safeguarding fund resources ” would reduce the effectiveness of a precautionary arrangement by subjecting the programme to performance criteria that would not be critical to deal with the capital account crisis. progress with crisis resolution initiatives efforts are also underway to develop collective action clauses ( cacs ) to augment a market - led process for restructuring of sovereign bonds. it is heartening to note that rapid progress has been made in promoting the inclusion of cacs in international sovereign bond issuances. we welcome the positive developments relating to the development of a voluntary code of conduct to deal with debt restructuring. we urge that the code should be developed in full and voluntary agreement of creditors and debtors and neither a mechanistic nor a prescriptive or standardized approach should be followed. in recent years, increasing attention has been accorded towards development and implementation of standards and codes to strengthen the international financial architecture. the imf and the world bank have taken the initiative to monitor and assess member countries ’ financial sectors as also their observance of standards and codes through reports on the observance of standards and codes ( roscs ). in future, roscs will help national authorities develop their own reform plans, assess compliance with international standards and codes, and serve, if published, as a signal of their policies ’ enhanced transparency. they will also provide helpful inputs for imf surveillance and technical assistance. accelerating poverty reduction and strengthening sustainable economic growth in low income countries millennium development goals, the monterrey consensus, and progress with the prsp approach : the role of the imf monterrey has generated consensus on the issues that need to be addressed to effectively alleviate poverty. this consensus needs to be transformed into concrete action urgently. a comprehensive and transparent system to monitor progress towards fulfilling the millennium development goals ( mdgs ) of poverty reduction, sustained economic growth, and promotion of sustainable development would need to be developed. the imf has attempted to achieve this through two programmes - the