the market expectations. currently the market assumes that the cash rate is likely to remain unchanged for at least the next 12 months, and then rise only very slowly beyond that. the forecasts also assume that the exchange rate and oil prices remain at their current levels. historically, we have found that assuming those variables remain constant is at least as good as any other forecast, while recognising that they are highly likely to change. in saying that, it is worth noting that the exchange rate has moved within a fairly narrow range over the past two years. these small variations have probably not been a major factor in your decision - making as cfos. in contrast, i would expect that the 20 per cent depreciation of the australian dollar in 2014 – 2015 did have a material impact on decision - making at any business with an export or import - competing focus. other developments in financial conditions can affect the forecasts too. one example is developments in money market rates. in the smp, we document the recent rise in money market interest rates in the us, particularly libor ( graph 1 ). there are a number of explanations for the rise, including a large increase in bill issuance by the us treasury and the effect of various tax changes on investment decisions by cfos at some us companies with large cash pools. 3 this rise in libor in the us has been reflected in rises in money market rates in a number of other countries, including here in australia. this is because the australian banks raise some of their short - term funding in the us market to fund their $ a lending, so the rise in price there has led to a similar rise in the cost of short - term funding for the banks here ; that is, a rise in bbsw. 4 this increases the wholesale funding costs for the australian banks, as well as increasing the costs for borrowers whose lending rates are priced off bbsw, which includes many corporates. however, the effect to date has not been that large in terms of the overall impact on bank funding costs. thus far, it has not been a consequential development from a forecasting point of view. it is not clear how much of the rise in libor ( and hence bbsw ) is due to structural changes in money markets and how much is temporary. in the last couple of weeks, these money market rates have declined noticeably from their peaks. we will continue to monitor how this unfolds in the period ahead. the outlook

guy debelle : the outlook for the australian economy opening keynote speech by mr guy debelle, deputy governor of the reserve bank of australia, at the cfo forum, sydney, 15 may 2018. * * * thanks to lynne cockerell for her help in preparing this speech. today i would like to talk about the bank ’ s outlook for the economy. we published this in the statement on monetary policy ( smp ) earlier this month. 1 this set of forecasts was little changed from the previous set of forecasts we released three months earlier. this is because the economy, both domestically and globally, has been evolving generally in line with our expectations. when reading through the bank ’ s forecasts, i think it is useful to avoid false precision. an important question to ask is : are these revisions to the bank ’ s outlook consequential for the monetary policy decision? similarly you can ask, do i think these changes affect my own decisions about my household or my business? a tenth or two of a percentage point here or there on the outlook for gdp or inflation is unlikely to matter that much for any of those decisions. often, these revisions reflect the new information that has come to hand over the previous quarter. this leads us to reassess the starting point for our forecasts of where the economy is then likely to go. in making this assessment, we ask whether the incoming data have been viewchanging or view - validating. over the previous three months ( and, indeed, the three months before that too ), the data have generally been view - validating. the forecasts that are published can best be characterised as the modal forecast for the economy. that is, they are the path for the economy which we think is most likely to occur. but there are a number of risks to that outlook. the smp talks about some of those uncertainties too. today i will also spend some time drawing out some of the issues around those uncertainties. 2 the central forecast as i just said, the forecasts we have just published are little changed from those we published in february. table 1 shows the bank ’ s outlook for gdp growth, the unemployment rate and inflation until june 2020. this is generally the time horizon that is relevant for the board ’ s deliberations on monetary policy. the forecasts embody a number of technical assumptions. these include that the cash rate 1 / 13 bis central bankers'speeches evolves broadly in line with