When I was invited to give this address, I was told that it would be part of a session entitled “Australia in 2020: strikingly similar, significantly different, or in relative decline”. From this, I assumed that I was required to speak on medium-term issues, which I am always very happy to do.
The threat to act will be more effective the more credible the central bank has been over time in actually delivering price stability. In addition, the knowledge that the central bank will normally make use of all available options – as circumstances dictate – to counteract situations that have the potential for undermining confidence and perturbing market conditions enhance control of private expectations.