. graph 6 6 / 11 bis central bankers'speeches i will return to foreign exchange markets in just a moment, but let me briefly take stock. the upshot of these recent developments is that global financial conditions have tightened a little. the cost for corporations to raise capital through equity and debt markets has increased a bit in the advanced economies. but overall conditions are not tight, with monetary policy rates still low ( relative to most estimates of neutral ) and government bond yields also low. indeed, bond yields are generally lower than they have been for a couple of years. implications for australia over recent months, developments in australian financial markets have been similar in many respects to those offshore. equity prices fell, credit spreads rose, and so did various measures of financial market volatility ; although, some of the more pronounced moves seen late last year have been retraced in early 2019. these changes have again largely been a story of risk premia increasing from low levels and were associated with rising concerns about downside risks, both internationally and domestically. the outlook for the domestic economy has also shifted, and the bank has revised down its forecasts for both growth and inflation. our forecasts continue to project a further gradual reduction in spare capacity in the economy, with the unemployment rate trending lower. that should see wages growth pick up, although only gradually, and inflation is also expected to increase gradually. the bank's statement on monetary policy and the governor's recent speech 7 / 11 bis central bankers'speeches provided comprehensive updates to this picture. 4 in response to this shift in the international and domestic outlooks, market expectations for the next move in the cash rate have switched signs : the markets have assessed that the next move is more likely to be down than up. that has been reflected in lower bond yields, alongside the effect of lower oil prices on market - implied inflation expectations. two - year bond yields in australia have tended to decline by a bit more than in many other major markets ( graph 7 ). part of that change is somewhat mechanical given that in both japan and the euro area policy rates are close to their effective lower bounds. this latest change in australia's interest differential extends the trend decline that has been underway for five or more years. graph 7 over the past couple of months, the australian dollar has depreciated by about 4 per cent on the basis of the trade - weighted index ( twi ). this largely reflects the effect of the appreciation of the yen and

##tances and maintaining financial corridors and services into the south pacific countries continues to be of importance. in 2019 we established the pacific remittances project with support from the ministry of foreign affairs and trade to address challenges facing remittance services domestically and in the pacific region. we are working with other agencies in new zealand, australia, the pacific and internationally, such as the asian development bank and international monetary fund to make remittances more accessible, safe and cost effective. along with the reserve banks of australia, fiji, papua new guinea, samoa, the solomon islands, timor leste, tonga, vanuatu and other partners we are developing a regional ‘ know your customer ’ facility. this will help remitters and other businesses to meet their compliance needs. ultimately we hope that it will enable access to financial services for sectors of the pacific region that are in danger of being financially isolated. 19 in doing so we hope to maintain financial corridors and services to enable pacific countries ’ recovery and growth which in turn supports the financial stability and prosperity of our regional economy. conclusion te putea matua is kaitiaki for aotearoa ’ s financial ecosystem. we have a clear purpose, vision and values which support us in delivering kaitiakitanga for all new zealanders. this includes 4 / 5 bis central bankers'speeches delivering our mandates holistically with our workstreams on te ao maori, climate risk and south pacific remittances. we ’ re incredibly proud of our statement of intent published today, and the mahi that is underway to help us achieve our ambitious, but incredibly important, workplans. as i ’ ve explained today – this work is critical to us continuing to be the central bank for all new zealanders, now, and for generations to come. i ’ d encourage you to take a closer look at our statement of intent, and see where you can contribute. embrace the concept of matangirua ki matangireia in your endeavours to promote a more inclusive and climate - friendly financial ecosystem. working in unison, we fulfil our ultimate purpose. meitaki ma ’ ata tena koutou, tena koutou, tena koutou katoa 1 monetary policy : same objectives different challenges 2 monetary policy statement may 2021 3 statements of intent 4 rbnz statement of intent 2021 – 2024 5 rbnz statement of intent 2021 – 2024 6 reserve bank bill 7 te ohanga maori 2018 8 hawke