In the extreme test provided by the Asian crisis, we believe that the MCI with ‘bands’ produced unnecessary volatility in short-term interest rates in the 12 months or so after it was first introduced (that volatility began to diminish in the second half of 1998 as we more explicitly relaxed the ‘bands’ around desired conditions), so in that sense we believe that the MCI was not as helpful in the implementation of policy as we believe the Official Cash Rate will be.
Some countries with worse ratings are still growing much faster than Fiji like China and India for instance. But these indicators all point to three broad conclusions. First, we are slipping in our world rankings. Second, the world is passing us by. Lastly, they reconfirm that we have a lot of catching up to do.