is a lot of uncertainty about how these opposing forces will net out. but the forecast we released in our may 2008 statement on monetary policy was that the net result would be a significant slowing in demand and output growth this year. the evidence is pretty clear that some key components of private demand are now on a slower track. as always with such episodes, the extent of that slowing, and its duration, are uncertain. but to this point, something not unlike what was envisaged in the may outlook appears to be occurring. moreover, it looks more likely now than it did a couple of months ago that this more moderate track for demand will continue. if it does, it will, in due course, begin to exert downward pressure on those elements of inflation that had picked up in response to strong demand. that will probably take some time and it may be too soon yet to see much of that influence on the cpi figure due next week. indeed, on a year - ended basis, cpi inflation might rise further before it starts to come down, particularly given the recent further surge in global oil prices beyond what was assumed in our may projections. by the way, this surge in oil prices does not, in itself, amount to a rise in australia ’ s terms of trade. as such, it is likely to be exerting some further restraint on non - oil demand, which would, all other things equal, tend to dampen pressure on non - energy - related prices over time. on the information available at present, we still expect inflation to fall back to 3 per cent by mid 2010, and to continue declining gradually thereafter. we will, of course, conduct a thorough review of the outlook after receiving the next cpi figure, which the board will have available for the august meeting. the bank will publish its outlook in the next statement on monetary policy, due for release on 11 august. but for today ’ s discussion, i want to use the may projections as the basis for some remarks about the nature of the inflation target. as you know, since 1993 the bank has been framing its monetary policy around a mediumterm target for inflation of 2 - 3 per cent, on average, “ over the cycle ”. the reserve bank remains committed to achieving that target. apart from being consistent with the bank ’ s statutory obligations, it is what has been envisaged in successive formal agreements between two treasurers and two governors stretching back now over a dozen years. this framework has worked well

christopher kent : australian fixed income securities in a low rate world address by mr christopher kent, assistant governor ( financial markets ) of the reserve bank of australia, to the debt capital markets summit, sydney, 14 march 2018. * * * i would like to thank leon berkelmans for help in preparing this material. this is my first time at the debt capital markets summit. i appreciate the opportunity to speak at such an important event in the australian fixed income calendar. over the course of recent months, interest rates on a range of fixed income securities across the globe have risen. nevertheless, they remain at historically low levels. at the same time, spreads between non - government and government debt have remained low. indeed, over the past year or so they have declined to be around their lowest levels since the global financial crisis. accommodative monetary policies and generally low levels of inflation are contributing to easy financial conditions for issuers. in my presentation today, i ’ ll lay out some of the factors contributing to these financial conditions and then discuss how australian issuers have responded. in brief, more has been issued, by a more diverse set of issuers at longer average tenors. i ’ ll finish by looking forward to the year ahead. the global story to tell the story on pricing, for the most part i ’ m going to focus my attention on spreads between yields on non - government debt and those on government debt. that ’ s a familiar way of thinking about a key part of cost of those funds. at the same time it provides a sense of the market ’ s view of the risks involved. 1 globally, spreads on non - government debt are low and they have tightened further over the past year. indeed, spreads in many markets are as low as they have been since the financial crisis. for corporate bonds that ’ s true of both investment grade and non - investment grade debt ( graph 1 ). in short, demand for fixed income securities is strong. 1 / 15 bis central bankers'speeches why might that be? one contributing factor has been the improvement in global economic conditions. this is supporting business profits, which helps to reduce actual and prospective defaults. in turn, this underpins a narrowing of credit premia. we see evidence of this, for example, in the decline in default rates on high - yield us bonds over the past few years, although some of the decline since last year may also reflect the improvement in conditions affecting us oil producers. another part