Whether or not it is permanent, the coexistence of low inflation and low unemployment does appear to be highly persistent. This persistence has led to a reassessment in a number of countries of the unemployment rate that is sustainable without inflation becoming a concern. This is an important issue and one I will return to in the context of Australian monetary policy.
The Australian Economy I would first like to provide an update on the Australian economy. Just as the global economy slowed over the second half of 2018, so too did the Australian economy – we went from growing at an above-average pace in the first half of 2018 to a below-average pace in the second half (Graph 4).