I have spoken at this dinner three times before: in 2010, 2012 and 2014. Thank you for inviting me back. When I spoke in 2012 the title of my remarks was ‘What is Normal?’1 On that occasion, I talked about a recalibration in expectations about what was considered normal in the Australian economy.
I also suggested that the normal level of interest rates might be lower than it was in the past. Five years on, we are still searching to understand what is normal. In a number of countries, low rates of unemployment are coexisting with below-average inflation. Low inflation, in turn, means low interest rates.