There are also ongoing conversations between the Reserve Bank and Treasury exploring the optimal arrangement for strengthening our coordinated response to future slowdowns. Fiscal policy, like monetary policy, acts with significant lags. Many of the first-best options for long-term investment have the longest lead times.
The third lesson is that an independent central bank is essential to ensuring that the first two requirements I have just mentioned are met. It strengthens the credibility of monetary policy aimed at price stability and therefore enables relatively lower interest rates to be maintained. Central bank independence has many elements; the personal and institutional aspects are two of the most important.