easier for both the public and business sectors to contemplate long - term investments, given that future returns don't need to be discounted as much. they also mean that financing costs are lower. with interest rates at record lows and likely to remain low for quite some time there are plenty of opportunities here. monetary policy i would like to finish by returning to monetary policy. at its meeting yesterday, the reserve bank board decided that, given the current outlook, the best course was to hold the cash rate steady at 0. 75 per cent. the recent inflation and unemployment data were both in line with our expectations and show things moving in the right direction, although only very gradually. over the next couple of years we expect further progress to be made towards full employment and the inflation target, although that progress is likely to remain quite slow. the gradual nature of this progress reflects some significant structural shifts in the global economy related to technology and globalisation and, as i discussed earlier, a period of adjustment in household finances in australia. monetary policy has already responded to this and is providing considerable support to the australian economy. given the outlook i have outlined today, the board has, however, continued to discuss the merits of further monetary stimulus in an effort to speed the pace of progress and to make it more assured. on balance, though, the board has decided to hold the cash rate steady, recognising the significant monetary stimulus already in place and the long and variable lags associated with monetary policy. this decision also reflects a judgement about the benefits from a further reduction in interest rates against some of the costs and risks associated with very low interest rates. it certainly remains the case that a further reduction in interest rates would help with the balance sheet adjustment by households with existing debt, which should help bring forward the day that consumption strengthens. it would also have a further effect on the exchange rate, which would boost demand for our exports and therefore support jobs growth. on the other side of the equation though, there are risks in having interest rates at very low levels. internationally, there are increased concerns about the effect of very low interest rates on resource allocation and their effect on the confidence of some people. lower interest rates could also encourage more borrowing by households eager to buy residential property at a time when there is already a strong upswing in housing prices in place. if that occurs, this could increase the risk of problems down the track. so there is a balance to be struck here. the

speech the year ahead philip lowe [ * ] governor address to the national press club sydney – 5 february 2020 thank you for inviting me back to address the national press club. it is an honour to be here again. at this lunch a year ago, i spoke about the year ahead. i would like to do the same again today. twelve months ago, i reminded you that we do not have a crystal ball that can be used to see the future with certainty. since then, some things have turned out as expected, but there have been plenty of surprises as well. no doubt, the same will be true this year. today, though, i would like to talk about the reserve bank's central scenario for the global and australian economies and some of the factors that we will be watching over the year ahead. i would also like to touch on monetary policy. the global economy the central scenario for the global economy over the next couple of years remains reasonable and growth is expected to be a little stronger than it was in 2019. the imf estimates that the global economy expanded by 2. 9 per cent last year and in its latest published forecasts is predicting economic growth to lift to 3. 3 per cent this year and 3. 4 per cent in 2021 ( graph 1 ). graph 1 looking back, though, global growth in 2019 was not as strong as we had expected. this was largely because the trade and technology disputes between the united states and china and the brexit debate had a sobering effect on investment around the world. the trade disputes also led to some reconfiguration of global supply chains and resulted in very soft conditions in the manufacturing sector and a contraction in international trade. some of these dark clouds that were hanging over the global economy last year have lightened a little recently. with the progress on the trade and brexit issues, there have been some signs that the downswing in manufacturing activity and international trade is coming to an end ( graph 2 ). the down cycle in the global semiconductor industry also looks to be running its course. graph 2 these are encouraging developments and provide a reasonable basis to expect that this year will be better than last year. having said that, it remains possible that the expected pick - up in growth is derailed by a re - escalation of the trade and technology disputes. another, more recent source of uncertainty is the outbreak of the coronavirus, which i will discuss shortly. one other unexpected development over the past year