##ency and security for financial market infrastructures. this year i ’ d like to provide an update on our progress on this front, and then to elaborate on the portfolio of wholesale service initiatives that we are endeavoring to advance to add value for customers and end users. as always, my remarks reflect my own views and do not necessarily represent those of the federal reserve bank of new york or the federal reserve system. the anchor premise of my remarks last year was an appeal for greater technological diversity in our third level resiliency and security schemes, representing an impregnable firebreak, and a platform for recovery, should the core of an infrastructure become corrupted. this work complements our traditional focus on geographic dispersion of infrastructure and human capital, but recognizes a fundamental distinction between cyber resiliency and traditional resiliency : what works for us in conventional resiliency scenarios, namely the automatic and instantaneous replication of data, works against us in cyber scenarios, reflecting risks that a pernicious malware, or a severe data corruption, or even an application failure propagates itself across primary, secondary, and tertiary operating sites, rendering a systemic infrastructure functionally inoperable. examples of technological diversity may take many forms, from the application code to 1 / 5 bis central bankers'speeches middleware components to the operating platform, and may canvass physical, distributed, hosted, or cloud - based solutions. reflecting their unique circumstances and assessments of the threat, financial market infrastructures will likely respond differently to the present challenge. without prescribing any particular solution, i will merely suggest that in the event of severe disruption efforts to enhance technological diversity represent an infrastructure ’ s best chance to achieve the two hour recovery objective promulgated by the committee on payment and market infrastructures ( cpmi ) and the board of the international organization of securities commissions ( iosco ). beyond measures to enhance technological diversity in our core infrastructure, we continue to make meaningful progress developing manual contingency procedures in the event of a protracted wholesale service disruption from which we cannot recover on a same day basis, our best efforts to ensure resiliency notwithstanding. recognizing the constraints on operating capacity in such a scenario, this work seeks to maintain critical functionality and to identify and support systemically important payments in our transaction flow to mitigate customer and market impacts. increasingly, this work extends beyond the federal reserve to include infrastructure peers and other systemically important market participants to test our protracted outage hyp

income. so the australian community, by having access to capital markets, and facing macroeconomic policy settings which remained on the expansionary side, was able to continue to increase its spending at a very strong pace, even though income growth was impaired by international events. this involved declining rates of saving out of current income, and some extraction of accumulated equity from the dwelling stock. generally speaking, to have that flexibility is a good thing - with the proviso that, as with all good things, we don ’ t want to over - indulge. we can anticipate that, over the coming year, the two factors weakening overall performance over the past year will not recur, and indeed some reversal of these effects is likely. it is widely acknowledged now that there will be a strong recovery in farm production. the prospect of some continuing improvement in international conditions means that the downward trend in non - farm exports should bottom out, and a recovery begin. at the same time, domestic demand growth should moderate a little. capital spending by firms will probably continue to rise, but not as quickly, on current indications, as it has over the past year. some decline in dwelling construction activity has occurred, although this looks smaller than earlier thought. consumption spending looks likely in the near term to continue to benefit from steady growth in incomes, high levels of confidence and the higher and more accessible wealth available to households. if this outlook is correct, growth in the economy has probably already slowed as much as it is likely to. the year - ended growth rate of non - farm gdp will decline for another quarter as an earlier very strong quarter drops out. but the pace of expansion through the second half of 2003 is probably going to be at least as good as it was in the first. if the global economy continues on its present track, australian growth should clearly be picking up by the first half of next year. inflation will be pushed down a bit by the earlier exchange rate appreciation for a while, but is still thought likely to be about 2½ per cent in the medium term, based on the usual assumptions about oil prices, exchange rates and interest rates, and the above growth outlook. this picture is much as was described in our statement on monetary policy on 11 august. since that document was published, it is fair to say that the downside risks to the global economy have retreated further. most recent data on the australian economy also seem consistent with a moderation in non - farm growth in the first half