In other words, central bank credibility acts as an automatic stabiliser by inducing inter-temporal substitution in economic activity. All that’s needed is a clear and credible commitment by the central bank to a certain course of action. But how can we establish such commitment?
It has been a period of responding to change in the external environment, with an enduring commitment to our important public service mission. So the leadership challenge for my colleagues and I in the Central Bank is to act in a way that is balanced and proportionate, effective and fair and delivers the right outcomes.