age australians has jobs than ever before. the economy is expected to grow strongly this year, with our central forecast being for gdp growth of a little above 4 per cent. this resilience of the economy means that the record low interest rates are no longer needed. the other major development has been on the inflation front. over the year to the march quarter, cpi inflation was 5. 1 per cent and in underlying terms inflation was 3. 7 per cent. these numbers are lower than inflation rates in most other advanced economies, but they are higher than we have experienced for many years and higher than we were expecting. the main driver of the higher inflation has been global developments, with a series of major global supply shocks pushing prices up. over the past two years, covid - 19 has interrupted supply chains and continues to do so, with the recent lockdowns in some chinese cities again disrupting production and transport. on top of this, russia ’ s invasion of ukraine has resulted in sharp increases in the prices of oil and gas, base metals and many agricultural commodities. these shocks to global prices inevitably flow through to higher inflation in australia. but the higher inflation outcomes have a domestic component as well. there are a number of 1 / 3 bis central bankers'speeches areas where strong demand is putting pressure on available capacity, with many firms reporting difficulty in hiring workers with the right skills. this pressure on capacity is reflected in the broadening of the areas in which prices are rising more quickly than they have for some time. firms in a range of industries are now indicating that they are prepared to pass cost increases through to consumer prices. looking forward, we expect a further increase in the inflation rate as the effects of global developments wash through the year - ended figures. we then expect inflation to start moderating as some of the supply disruptions are resolved and / or as prices settle at a higher level – for inflation to stay high, prices need to keep increasing at a fast rate, not only settle at a high level. an offsetting influence over time will be stronger growth in labour costs as the labour market tightens. our central forecast – which is based on an assumption of further interest rate increases – is that underlying inflation will decline to the top of the target band in 2024. if interest rates were to remain unchanged, inflation would be higher than this. over recent years, the board has placed considerable emphasis on trends in growth in labour costs when making its decisions. this is because, over

than a year ( ‘ medium - term unemployment ’ ), and the long - term unemployment rate – people unemployed for more than a year – were still rising even after short - term unemployment peaked. both these rates start rising around the time that unemployment overall starts rising. this is because the stock of unemployed starts to rise partly because the flow back into employment slows down. this affects people who are already unemployed. but unemployment also rises because some previously employed people lose their jobs. this is especially relevant in recessions when many workers are laid off. so of course there is a process lag : it takes more than a year before someone who previously had a job becomes long - term unemployed, just by definition. this is why long - term unemployment continues to rise even after the layoffs decline to more normal rates. you can also see this effect during the smaller increases in overall unemployment in the late 1990s and in 2001. a recovering economy, solid employment growth, but rising long - term unemployment : it would have been tempting to misinterpret this as a structural problem. indeed, many did so at the time. but that probably is not what was going on. what this shows is the effect on a stock – unemployment – when the economic decision – to hire or lay off workers – is a flow in and out of that stock. graph 3 unemployment rates * % % short - term ( < 13 weeks ) medium - term ( 13 – 52 weeks ) long - term ( > 52 weeks ) seasonally adjusted by rba sources : abs ; rba 7 of 12 on lags once unemployment starts to decline, the stock – flow lag becomes more relevant. consider that, if the flow out of unemployment back into employment declines for a period, a stock of unemployed people can build up. even if that flow returns to more normal levels in the subsequent recovery, it can take a long time for that stock to return to low levels. that is exactly what we saw after the 1990s recession. it took 15 years from the peak, before long - term unemployment finally troughed, at a bit above ½ per cent of the labour force. again, this should not be interpreted as a structural deterioration in the performance of the labour market. it just took a long time to work down that stock of unemployment. more recently, the end of the mining investment boom in 2013 induced a period of slower growth and softer labour market conditions. as a result, both medium - term and long - term unemployment