We are inevitably more exposed to changes in global interest rates or sudden shifts in the investment preferences of overseas investors. At times, this can make it more challenging to maintain price stability and avoid unwanted swings in economic activity. This pattern of household investment also impacts economic performance.
The labour market was generally softer in 2011 after a year of unusual strength in 2010 (though the unemployment rate at its latest reading was virtually unchanged from a year earlier). These changes to the macroeconomic picture, against a backdrop of a period of intensified international turmoil, saw the Board lower the cash rate by 50 basis points in the closing months of 2011.