effects of this here too. even so, our interest rates did not fall as far as they did elsewhere due the combination of the resources boom, our relatively strong economy and higher levels of investment in australia. this year, the pandemic has brought another major shock, with investment intentions falling further. as a result, global interest rates and the return to savers have also declined. the gravitational pull of this on our own interest rates has been very strong. the rba has responded to this, with the policy rate now essentially zero in australia, as it is in many other countries. if we had sought to ignore this gravitational pull, there would have been obvious implications for our exchange rate and our economy. if our interest rates were higher than in the major countries there would be stronger inflows into australian dollar assets and this would put upward pressure on our exchange rate. in turn, this would make it harder to make the needed progress on jobs. over the medium term, i do expect to see a time when australia's strong economic conditions once again justify higher interest rates. but today, during a global pandemic when a lot of people have lost their jobs and many businesses are struggling, is not the time for that. the fourth and final change on the monetary front is the return to a world in which quantities, not just prices, matter. over recent decades, monetary policy has been about the price of money, or the short - term interest rate. little attention was paid to the quantity of money. this has now changed, with the rba now undertaking qe, or quantitative easing, as many other central banks are also doing. quantities and prices are obviously connected, so qe works partly through affecting the price of money, including long - term risk - free interest rates. but there are other effects too. when the central bank increases the quantity of money and buys assets, liquidity in the financial system is increased and investors in the private sector need to purchase other assets with the proceeds of the bonds they sell to the central bank. these portfolio adjustments can affect the price of other assets and international capital flows, as well as the exchange rate. we are still learning about how strong and durable these transmission mechanisms are, and we will learn more over coming months as we implement our own $ 100 billion qe program. to conclude, 2020 has been a year of great change and disruption. we are all talking about issues that few of us even contemplated at the start of the

since 1916, when many australians left our shores to fight in the first world war. graph 3 population growth % % projection - 2 - 2 sources : abs ; australian treasury ; rba the fast population growth of recent decades has been a major factor shaping our economy. it has underpinned our relatively fast growth in gdp compared with other advanced economies. it also slowed the ageing of the population, given that the new arrivals have been fairly young. the large number of students coming to australia has also boosted our education sector. and the effects of fast population growth have also been felt in our housing market and in pressure on some of our infrastructure. so the effects have been widespread. looking to the future, it remains hard to predict when the borders will open again and when they do, what the rate of new arrivals will be. if population growth is to be noticeably slower in a post - covid world, the trajectory for our economy will look different too. a changed property market a third area where the pandemic is having a marked effect is on our property market. it is a complex picture here, with the market simultaneously adjusting to : a recession ; lower population growth ; record low interest rates ; substantial government incentives to support residential construction ; and changes to the way that people work, shop and live. so there are a lot of moving pieces at present and the effects are very uneven across different types of property and across the country. the effects of the pandemic are most obvious in the market for retail properties in our cbds, where vacancy rates have increased sharply ( graph 4 ). not surprisingly, rents and the capital values of these properties have both fallen. there has also been an impact on the cbd office market, as people work from home. the national office vacancy rate has increased sharply this year and further increases are expected ( graph 5 ). but even here, there is considerable variation across our cities, with the biggest increase in cbd office vacancies in sydney and melbourne. in contrast, the markets for industrial property have been stronger, with increased demand for warehousing and distribution facilities as people increasingly shop online. graph 4 retail vacancy rates * by property type % % cbd retail 10. 0 10. 0 7. 5 7. 5 5. 0 5. 0 regional * * 2. 5 2. 5 0. 0 * * * vacancy rates for specialty stores centres anchored by department stores source : jll research 0. 0 graph 5 office vacancy rate