The monetary authority, however, cannot permanently fool agents with rational expectations, because they are aware of the incentives of the monetary authority to regress on its decision about inflation. So in the end, any attempt of the monetary authority to exploit the Phillipsrelationship is doomed to produce inflation without reducing unemployment.
We have a mandate to promote stability and efficiency, which I think we can view as including the efficient resolution of the coordination problems that I’ve just described. And we have significant powers that can be directed to that end. For these reasons, the RBA has been increasing its focus on these coordination issues in recent times.