BIS Review 71/2002  1  Let me be very clear at the outset, and I will repeat this more than once in what follows, that Australia is not experiencing deflation now, and is unlikely to do so any time soon. The issue is an international one much more than a domestic one, but given its prominence it is worth some consideration. 1.
Since the early 1990s, our operating definition of ‘price stability’ has been that inflation averages 2 point something per cent. At this level, inflation is something that most people don’t normally need to worry about. In terms of the policy framework, we adopted a flexible inflation targeting framework around three decades ago and this has been supported by successive governments.