As you know, there was a further adjustment in November, taking the cash rate to 6.25 per cent, somewhat above its medium-term average. The background to the rise in inflation, and the associated adjustments to policy, is fairly well known.
After a long period of solid economic growth, we have approached what for practical purposes can be called full capacity, at least for the moment. The evidence for this is quite widespread. In the labour market, we are as fully employed as we have been at any time in the past 30 years or more.