pressures in short - term money markets have eased, with bbsw about 10 basis points lower than its recent peak ( relative to ois ). while some business lending rates are closely linked to bbsw rates – and so have increased a little – there have been few signs to date of changes to rates on loans for housing or small businesses. while developments in global financial markets such as i've just described influence australian financial conditions, the link is far from one - to - one. this is not surprising given that the reserve bank sets monetary policy according to the outlook for australian economic activity and inflation, and within a freely floating exchange rate regime. so even though the yield on 10 - year government bonds in australia moves quite closely with the equivalent us yield from day to day, over time these yields follow their own paths. indeed, this year the difference between yields on 10 - year australian government bonds and equivalent us treasury securities has become negative for the first time in quite a while ( graph 8 ). also, the federal funds rate has now risen from close to zero a few years ago to be at the same level as the australian cash http : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 06 - 06. html 8 / 19 6 / 7 / 2018 some features of the australian fixed income market | speeches | rba rate. these changes reflect a few important differences across the two economies. in the united states, the economy has moved beyond what most consider to be full employment, inflation is close to the fed's target and expectations are that the federal open market committee will continue to raise its policy rate ; moreover, the united states is embarking on a significant fiscal expansion. by contrast, there remains spare capacity in the australian labour market – notwithstanding strong employment growth over the past year – inflation is expected to rise gradually towards the reserve bank's target, and market pricing implies no expectation of a rise in the cash rate until around mid next year at the earliest. fiscal policy in australia is also on a different course to the united states, but there are other speakers here today addressing that topic. graph 8 so yields have risen in australia a bit, but by less than in the united states and they remain low. spreads have also increased of late, but they too remain at low levels across a number of australian markets ( graph 9 ). over the past year or more, spreads declined in response to a number of factors. accom

, activity is entering an upward phase and economic policy ’ s impact on the economy is expansionary, then monetary policy ought to contribute to a somewhat lighter foot on the accelerator. but if most of the unduly high inflation stems from transient increases in the price level and if an economic upturn is not yet assured, it may then indeed be advisable to somewhat defer an upward adjustment of the instrumental rate. it is likely to be around these and other aspects that our deliberations at the riksbank will circle when the executive board finally adjusts the coming inflation report and next discusses monetary policy on 18 march. that is still almost a fortnight ahead and some more statistics are due to be published. in the meantime, the six of us on the board will have to form our opinions step by step and decide whether there is to be some increase in the repo rate already in march or whether it is possible to go on waiting. personally i share the concern about inflation prospects that a number of my colleagues have expressed in speeches recently.