employment struggle to retrace lost ground. longer - lasting changes in labor force participation could make wage pressures more persistent and have implications for the assessment of maximum employment. tapering asset purchases since the middle of last year, the fed has been increasing its holdings of treasury securities and agency mortgage - backed securities by $ 120 billion a month to foster smooth market functioning and to support the economy by putting downward pressure on interest rates. conditions had improved considerably by the time we announced our forward guidance for asset purchases in december, but the unemployment rate remained at 6. 7 percent, near - term growth was being constrained by heightened social - distancing restrictions amid surging hospitalizations from covid - 19, and inflation was running - 4significantly below 2 percent. as we sit here today, demand for labor is strong, and unemployment has declined to 4. 8 percent. we have exceeded the previous high for real gross domestic product and are close to reaching the pre - covid trend. inflation, about which i will say more shortly, is running at more than twice the fomc ’ s longer - run goal. taking all of the evidence into account, i think it is clear that we have met the test of substantial further progress toward both our employment and our inflation mandates, and i would support a decision at our november meeting to start reducing these purchases and complete that process by the middle of next year. bear in mind that asset purchases are pressing down on the accelerator, adding each month to the amount of accommodation the fed is providing to the economy through downward pressure on longer - term interest rates. reducing purchases and ending them on this schedule is not monetary tightening, but a gradual reduction in the pace at which we are adding accommodation. monetary policy when the goals are not complementary a move to reduce the pace of asset purchases soon also is entirely consistent with the fomc ’ s plan to pursue our longer - run maximum - employment and price - stability goals, and our new monetary policy strategy, which we refer to as our framework. the forward guidance that we put in place for asset purchases was an operationalization of the new framework. last december, with inflation running well below 2 percent and unemployment still elevated, we committed to continue purchasing assets at least at the current pace until we had made substantial further progress toward our goals. in most situations, those goals are complementary. that is, high unemployment usually coincides - 5with subdued inflationary pressures. therefore, at the time, we did

. some that experienced considerable turbulence in the middle of last year, when tapering was first mooted, have seen less of that recently. this owes something at least to policy responses in those countries in the intervening period. among those countries that have been under most pressure of late, genuine domestic sources of risk can be observed in most instances. in several cases the market pressure has resulted in policy responses, which were perhaps needed anyway. in general then, tapering is proceeding, so far, about as well as can be expected. in the meantime, forecasts for the global economy haven ’ t changed much in recent months. if anything they have inched higher. they suggest that 2014 growth will be higher than in 2013, and at about average pace. more of the growth is coming from the advanced countries, and proportionately not quite so much from the emerging ones. that, too, is bis central bankers ’ speeches probably a welcome re - balancing in some respects after the weakness of the advanced countries in recent years. australia ’ s terms of trade have been little changed over the past year, though we still assume they will decline further in the future. turning to the australian economy, for some time our view has been that growth has been running below its trend pace. the national accounts released a couple of days ago don ’ t significantly change that assessment. for the year to the december quarter of 2013, real gdp rose by about 2¾ per cent. this is roughly in line with the forecasts we have had for a while. the drivers of growth are shifting. as we have been saying for some time now, and as confirmed in the recent survey of capital expenditure intentions by firms, the very high level of investment spending by mining companies has turned down, and the decline will accelerate over the coming year. other areas of demand will provide at least some offset. export volumes for resources are growing strongly, as the capacity that has been put in place by the high levels of investment comes on line. for example, iron ore shipments have risen by about 85 per cent from their levels of five years ago, to around 1. 5 million tonnes per day. they will rise further over the coming year or two. it is clear that dwelling investment activity will rise strongly over the period ahead. over the past three months, approvals to build private dwellings numbered almost 50, 000. that is an increase of about 27 per cent from the figures of a year earlier, and is the highest threemonth total in