loss of incomes and jobs would be even more pronounced. whatever the timing of the recovery, when it does come, we should not be expecting that we will return quickly to business as usual. rather, the twin health and economic emergencies that we are experiencing now will cast a shadow over our economy for some time to come. it is highly probable that the severe shocks we are now experiencing will change the mindsets of some people and businesses. even after the restrictions are lifted, it is likely that some of the precautionary behaviour will persist. and in the months ahead, we are likely to lose some businesses, despite best efforts, and some of these businesses will not reopen. there will also be a higher level of debt and some households might revaluate the risks of having highly leveraged balance sheets. it is also probable that there will be structural changes in the economy. we are all learning to work, shop and travel differently. some of these changes will probably stay with us, requiring a rethinking of business models. so the crisis will have reverberations through our economy for some time to come. the best way of dealing with these reverberations is to reinvigorate the country ’ s growth and productivity agenda. as we look forward to the recovery, there is an opportunity to build on the cooperative spirit that is now serving us so well to push forward with reforms that would move us out of the shadows cast by the crisis. a strong focus on making australia a great place for businesses to expand, invest, innovate and hire people is the best way of extending the recovery into a new period of strong and sustainable growth and rising living standards for all australians. the reserve bank ’ s policy response i would now like to change tack and turn to the reserve bank ’ s policy response. to recap, that response has had five elements : 1. a reduction in the cash rate to 25 basis points with forward guidance that the cash rate will not be increased until we are making sustainable progress towards our goals for full employment and inflation 2. the introduction of a target for the yield on 3 - year australian government bonds of 25 basis points, and a preparedness to buy government bonds in whatever quantities are needed to achieve that target 3. the introduction of a term funding facility, under which authorised deposit - taking institutions ( adis ) have access to funding from the reserve bank for three years at 25 basis points, with additional funding available if adis increase

of our 6 september interest rate announcement, the risks around the basecase projection are judged to be a little greater than at the time of the july update. the main upside risk relates to the momentum in household spending and housing prices, while the main downside risk is that the u. s. economy could slow more sharply than expected, leading to lower canadian exports. the bank judges that the risks to its inflation projection are roughly balanced. on 17 october, we left our key policy rate unchanged at 4. 25 per cent. the current level is judged, at this time, to be consistent with achieving the inflation target over the medium term. we at the bank will continue to pay close attention to the evolution of risks, as well as to economic and financial developments in the canadian and global economies.