I want to turn now to outline something of how we think about the exchange rate in setting monetary policy. In setting the Official Cash Rate, we are always very conscious of exchange rate changes, and how those developments will affect the outlook for growth and inflation a little down the track. Those effects have changed through time.
But the underling balance of demand and supply, viewed over the longer run, strikes me as a good deal more healthy than in sometimes suggested. Jewellery fabrication remains the major source of demand, and here prospects seem to me to be generally encouraging.