Preserving the purchasing power of money is the most important contribution that monetary policy can make to sustainable prosperity. Having a medium-term numerical target for inflation – in our case, 2-3 per cent on average – operated by an independent central bank, remains for Australia (and many other countries) the most straightforward way of giving practical effect to that overall goal.
To date, moreover, the system has worked well. For a start, the target has been satisfactorily achieved.