also fallen sharply, with increased uncertainty around the strength of future demand. some apparent weakening of demand for credit may also reflect perceptions by businesses that credit would not be available or that terms have tightened. figure e : annual credit growth ( by sector ) % % housing consumer business agriculture - 5 - 5 - 10 - 10 - 15 - 15 source : reserve bank balance sheet survey. figure f : credit demand ( observed change over past 6 months ) % mar - 18 sep - 19 sep - 18 mar - 20 mar - 19 jun - 20 % more demand for credit - 10 - 10 - 20 - 20 - 30 - 40 less demand for credit residential mortgage loans consumer loans - 30 commercial property loans sme business loans corporate loans agricultural loans dairy loans - 40 source : reserve bank credit conditions survey. indeed, banks have begun tightening several lending standards, particularly around serviceability assessments and interest rate margins ( figure g ). much of the tightening that has occurred to - date has been limited to more risky sectors. for some ( such as commercial property, smes and dairy ) this represents a continuation of trends that preceded covid - 19. however, banks have begun to apply more conservative standards to particular sectors exposed to the covid - 19 shock such as tourism, retail, accommodation, and construction. while some tightening is understandable and will reflect the general deterioration in the quality of applications, banks should not become overly cautious and should continue to focus on the long - term prospects of the applicants. figure g : lending standards ( change over past 6 months ) % collateral requirements repayment terms interest markup serviceability requirements covenants other factors % tighter - 10 - 20 - 30 - 10 easier residential mortgage lending - 20 commercial sme business property lending lending corporate lending agricultural lending - 30 source : reserve bank credit conditions survey. emerging risks and structural changes resilience and its corollary, risk management, is not “ once and dusted ”. it is a dynamic process, one that must be continually tested, prepared for and built in the face of unexpected scenarios, and new and emerging risks. today, new risks are emerging as industry structures, technology and environmental factors evolve. the pandemic is a reminder that periodic crises are a fact of life, but that the timing and nature of future crises are notoriously difficult to predict. amongst the many significant challenges facing the financial system over the next decade are cyber risk, fintech, climate risk, financial inclusion and the changing landscape for digital currencies

speech achieving full employment michele bullock [ * ] deputy governor speech at the ai group newcastle – 20 june 2023 introduction i would like to thank the australian industry group for the invitation to speak at this lunch today. it is great to be in newcastle. in recent times, my colleagues and i have spent a lot of time talking about the current bout of inflation in australia and globally. the reason for this focus is clear : inflation is too high, and the longer this persists, the more damaging it becomes. it is in all our interests to bring inflation down and the reserve bank board has been increasing the cash rate to achieve this. but just because our inflation objective has been in focus recently, it does not mean that the other part of our mandate – maintaining full employment – has become any less important. full employment is, and has always been, one of our two main objectives. when discussing full employment, in the context of a central bank ’ s mandate, economists typically talk about the non - accelerating inflation rate of unemployment – the nairu. i will come back to this concept. but, more generally, full employment means that people who want a job can find one without having to search for too long. as i will emphasise later, the number of hours of work that people can secure is also important in defining full employment. it is hard to overstate the importance of achieving full employment. when someone cannot find work, or the hours of work they want, they suffer financially. [ 1 ] however, the costs of unemployment and underemployment extend well beyond financial impacts ; work provides people with a sense of dignity and purpose. unemploy ment – particularly long - term unemployment – can be detrimental to a person ’ s mental and physical health. the costs of not achieving full employment tend to be borne disproportionately by some groups in the community – the young, those who are less educated, and people on lower incomes and with less wealth. in fact, for these groups, improved employment outcomes and opportunities to work more hours are much more important for their living standards than wage increases. in my remarks today i want to focus on the reserve bank ’ s full employment objective, while also giving an overview of how the labour market has evolved in recent years and months. i will start by giving an update on current labour market conditions and how we got here. i will then discuss how we think about employment in the context of setting monetary policy and how