These adjustments are difficult, but if they are not allowed to occur, as a nation we will have given up the potential benefits that the changes in the world economy are making possible. Public policy can help in the adjustment process by promoting flexibility in the economy and by reducing some of the costs of change for individuals and communities.
It can also help manage some of the new risks arising from these global developments. Monetary policy can help the adjustment by keeping inflation under control and maintaining stability in the overall economy. Our judgement is that the current setting of monetary policy is consistent with this, with the Board keeping the cash rate unchanged at 4.25 per cent at its meeting yesterday.