Mr Macfarlane elucidates the stability of the financial system and comments on what the Reserve Bank of Australia needs to do to fulfil its financial stability responsibilities Text of the eighteenth R.C. Mills Memorial Lecture delivered by Mr I J Macfarlane, Governor of the Reserve Bank of Australia, in Sydney on 29 July 1999.
Public investment fell drastically due to delays in public works programs. Nevertheless, according to our estimates, there still remained a positive output gap inherited from several years of strong aggregate demand growth. As another consequence of the relative price shocks, inflation was moving well above its target range for the year (3.5%-4.5%).