risk of future inflation. this scenario can't be completely discounted. it would seem, though, to have a fairly low probability in australia, especially in light of the continuing spare capacity in our labour market. the more likely case here is that wage growth picks up gradually as the demand for labour strengthens. globally, an alternative scenario is that the period of slow wage growth turns out to be much more persistent, partly for the reasons that i discussed earlier. in this scenario, wages growth eventually picks up, but it takes quite a while longer. if so, inflation stays low for longer, although there are other factors that could push inflation higher. this scenario is one in which the phillips curve is flatter than it once was. it is one in which inflation is harder to generate. we can't yet tell though whether the phillips curve in australia has become flatter, given that we have experienced relatively little variation in the unemployment rate over recent times. the combination of a flatter phillips curve and inflation below target raises a challenge for central banks : how hard to press to get inflation up? for a central bank with a single objective of inflation, the answer is relatively straightforward. inflation is too low, so you do what you can to get inflation up. if inflation doesn't increase, you need more monetary stimulus. this approach does carry risks, though. a flatter phillips curve means that the monetary stimulus has relatively little effect on inflation, at least for a while. at the same time, however, the monetary stimulus is likely to push asset prices higher and encourage more borrowing. faced with low inflation, low unemployment and low interest rates, investors are likely to find it attractive to borrow money to buy assets. this poses a medium - term risk to financial stability. australia's monetary policy framework is better placed to deal with this world than some others. we have a flexible medium - term inflation target that allows financial stability considerations to be taken into account in the setting of monetary policy. over recent times you would have noticed that we have been paying close attention to the risks in household balance sheets. household debt is high and rising faster than the unusually slow growth in incomes. these developments have had a bearing on the setting of monetary policy. we have not sought to stimulate a rapid lift in inflation. the fact that the labour market has been generating sufficient jobs to keep the unemployment rate broadly steady has allowed us to be patient. our judgement has been that seeking a more rapid pick - up

around the strategy adopted. another factor that may warrant disclosure is the company ’ s ability — and flexibility — to adjust its strategy in response to emerging climate conditions, including alternative ways to use resources and the robustness and redundancy of business processes. tcfd status report ( 2019 ) pg. 64 tcfd status report ( 2019 ) pg. 63 tcfd status report ( 2019 ) pg. 62 this includes several industry associations and non - governmental organizations that have brought companies together to work through sector - specific approaches to climate change issues. for example, the world business council for sustainable development ( wbcsd ) has convened or announced “ preparer forums ” for various sectors and industries : oil and gas ; electric utilities ; chemicals ; all speeches are available online at www. bankofengland. co. uk / news / speeches looking ahead, the tcfd is currently considering how to : provide additional guidance on how to conduct scenario analysis ; publish business - relevant scenario templates to lower implementation costs ; improve understanding and improve comparability ; and start a work stream on how to roll out these approaches to portfolio measurement to more asset owners. the bank of england is doing our part by assessing the strategic resilience of the world ’ s leading financial centre. the bank will be the first regulator to stress test its financial system against different climate pathways, including the catastrophic business as usual scenario and the ideal — but still challenging — transition to net zero by 2050 consistent with the uk ’ s legislated objective. 17 in response, banks will need to establish how their borrowers are managing current and future climaterelated risks and opportunities. those assessments will reveal : which firms have strategies for the transition to a net zero economy ; which are gambling on new technologies or government inaction ; and which haven ’ t yet thought through the risks and opportunities. the test will help develop and mainstream cutting - edge risk management techniques, and it will make the heart of the global financial system more responsive to changes in the climate and to government climate policies. as with climate disclosure, such strategic assessments will need to go global if the world is going to stabilise temperatures below two degrees. that is one reason why the bank is developing its stress testing approach in consultation with industry, the credit rating agencies and the network for greening the financial system ( ngfs ) – a group of 42 central banks and supervisors ( including the jfsa ) that represent half of global emissions. fourth and finally