Reserve Bank Act 1959  The objectives of monetary policy are given in the and further elaborated in the Statement on the Conduct of Monetary Policy. We have an inflation target. The Board is seeking to set monetary policy so that inflation averages between 2 and 3 per cent over the medium term.
We knew that an adaptive expectations Phillips Curve would explode if the lag coefficient was one - we just couldn’t get its estimated value to be one. We had yet to apply Kalman filters or other split-sample techniques and were yet to realize the problems with the sum of the lagged coefficients test.