This very short-term view of monetary policy arises because journalists have to write a story every day and economists in financial institutions have to advise their dealing rooms every day. But monetary policy is a much more slowly evolving process than this, and there are elements in the process that are more important than the evaluation of the latest statistics.
The first of these is to have a clearly enunciated framework of what monetary policy is seeking to do, and the second is to have a view of how the world economy is evolving and how it is affecting Australia. Let me now say a little more about each of these subjects. What can monetary policy achieve?