Through various channels, exchange rate depreciation can also loosen financial conditions in Australia, which is not always the case in other countries, particularly those for which inflation expectations are not well anchored and where there are substantial foreign currency borrowings that are unhedged. [10] Foreign monetary policy settings, particularly those in the United States, can also affect global risk premia.
In these brief remarks, I won’t thoroughly review the benefits or costs of our highly accommodative policies, emphasizing only that I believe they have, on net, provided meaningful support to the recovery. But I do want to spend a moment on one potential cost – financial stability – because this topic returns us to the theme of “many targets” for central banks.