agreement on bank supervisory procedures. banks ’ investment grade assets were to be valued not at market values but at amortised cost. and banks ’ sub - investment grade assets were to be valued at a long - run average of market prices. in the teeth of crisis, and in the interests of macroeconomic stability, the first phase of fair value had ended. this pattern was to be repeated half a century later – the second wave of fair value. historic cost accounting remained in the ascendancy in the us from the 1940s right though to the early 1970s. but from the mid - 1970s onwards, accounting standard - setters began to embrace fair value measurement, first in the context of banks ’ portfolios of equities and other marketable securities. 5 by the late 1980s, there was widespread recognition that traditional accounting approaches were obscuring the real value of securities and derivatives. us experience during the savings and loan crisis in the mid - 1980s provided further impetus. forbearance, including about the valuation of assets and liabilities, was widely believed to have been a cause of the build - up of problems among the thrifts. 6 in 1989, congress passed the financial institutions recovery, reform and enforcement act ( firrea ), tightening valuation standards among banks and bringing them closer to fair values. in the same year, the international accounting standards committee ( iasc ) commenced a project to assess the measurement and disclosure of financial instruments. these too were to suffer a set - back. by 1990, recession had taken hold in the us, with lending contracting sharply. as in 1938, the us economy was suffering “ financial headwinds ”. as in 1938, the fed were quick to call for a relaxation of prudential and valuation standards to head - off pressures on banks. 7 and as in 1938, the upshot was a concerted move by the then - president, george bush, relaxing examination and valuation standards. 8 for the second time, fair value had been returned to its box. and so to the present day – the third phase. by 2008, the ranks of “ accomptants ” had swelled, with numbers of recognised accountants in the uk totalling over 275, 000. yet the issues today have loud echoes of 1938. through the 1990s, the main international accounting standard - setters extended the boundaries of fair value. in the us, this was given impetus by the federal deposit insurance corporation improvement act ( fdicia ) in 1991. widespread use

age australians has jobs than ever before. the economy is expected to grow strongly this year, with our central forecast being for gdp growth of a little above 4 per cent. this resilience of the economy means that the record low interest rates are no longer needed. the other major development has been on the inflation front. over the year to the march quarter, cpi inflation was 5. 1 per cent and in underlying terms inflation was 3. 7 per cent. these numbers are lower than inflation rates in most other advanced economies, but they are higher than we have experienced for many years and higher than we were expecting. the main driver of the higher inflation has been global developments, with a series of major global supply shocks pushing prices up. over the past two years, covid - 19 has interrupted supply chains and continues to do so, with the recent lockdowns in some chinese cities again disrupting production and transport. on top of this, russia ’ s invasion of ukraine has resulted in sharp increases in the prices of oil and gas, base metals and many agricultural commodities. these shocks to global prices inevitably flow through to higher inflation in australia. but the higher inflation outcomes have a domestic component as well. there are a number of 1 / 3 bis central bankers'speeches areas where strong demand is putting pressure on available capacity, with many firms reporting difficulty in hiring workers with the right skills. this pressure on capacity is reflected in the broadening of the areas in which prices are rising more quickly than they have for some time. firms in a range of industries are now indicating that they are prepared to pass cost increases through to consumer prices. looking forward, we expect a further increase in the inflation rate as the effects of global developments wash through the year - ended figures. we then expect inflation to start moderating as some of the supply disruptions are resolved and / or as prices settle at a higher level – for inflation to stay high, prices need to keep increasing at a fast rate, not only settle at a high level. an offsetting influence over time will be stronger growth in labour costs as the labour market tightens. our central forecast – which is based on an assumption of further interest rate increases – is that underlying inflation will decline to the top of the target band in 2024. if interest rates were to remain unchanged, inflation would be higher than this. over recent years, the board has placed considerable emphasis on trends in growth in labour costs when making its decisions. this is because, over