turning now to the australian labour market, the unemployment rate, at 5. 2 per cent, is a little higher than when we met six months ago. this is despite employment growth having been stronger than we had expected. what has happened is that increased demand for labour has been met with more labour supply, especially by women and older australians. reflecting this, a higher share of the australian adult population is participating in the labour market than ever before. this is good news. but one side - effect of this flexibility of labour supply is that it is harder to generate a tight labour market and so, in turn, it is harder to generate a material lift in aggregate wages growth. looking forward, while some slowing in employment growth is expected, the central scenario is for the unemployment rate to move lower to reach 5 per cent again in 2021. if things evolve in line 1 / 4 bis central bankers'speeches with this central scenario, it is probable that we will still have spare capacity in the labour market for a while yet, especially taking into account underemployment. this means that the upward pressure on wages growth over the next couple of years is likely to be only quite modest, and less than we were earlier expecting. caps on wages growth in public sectors right across the country are another factor contributing to the subdued wage outcomes. at the aggregate level, my view is that a further pick - up in wages growth is both affordable and desirable. turning now to inflation, the june quarter outcome was broadly in line with expectations, after a run of lower - than - expected numbers in earlier quarters. over the year to june, inflation was 1. 6 per cent, in both headline and underlying terms, extending the period over which inflation has been below the 2 – 3 per cent medium - term target range. the reserve bank board remains committed to having inflation return to this range, but it is taking longer than earlier expected. there are a few factors that i would highlight as contributing to the low inflation outcome over the past year. these are : the slow growth in wages ; the ongoing spare capacity in the economy ; various government initiatives to address cost - of - living pressures on households ; and the adjustment in the housing market, which has contributed to unusually low increases in rents and declines in the price of building a new home in some cities. working in the other direction, the drought and the depreciation of the exchange rate have been pushing some prices up. looking ahead, inflation is still expected to pick

in australia is fit for purpose and appropriately balances competition and the protection of consumers. we are currently reviewing the regulatory regime in this area and as we complete this work, this issue may come before the parliament. another issue that we are working on that may come before the parliament is the strengthening of the regulatory arrangements that apply to the financial infrastructures that underpin australia ’ s financial markets. finally, we will be releasing the new $ 20 banknote on 9 october. there are currently around 170 million $ 20 notes in circulation, so this is a big logistical exercise. i am confident that australians will enjoy spending these new high - tech highly secure banknotes. i brought along a sheet today hot from the printing press for you to have a look at. thank you. my colleagues and i appreciate this opportunity to answer your questions. 4 / 4 bis central bankers'speeches