In her maiden speech as Governor of the Reserve Bank and delivered at the Commonwealth Bank’s 2023 Global Markets Conference Dinner, Michele Bullock provided guidance in how the RBA considers its mandate to target low and stable inflation, full employment and financial stability. The Governor told an audience of bankers, clients, and financial markets participants at Sydney’s Museum of Contemporary Arts on Tuesday evening ( 24 October) that the RBA’s core aims were often complementary but at times at odds with each other depending on the economic circumstances and the need to strike the right balance for the country.
At the heart of this approach lay the RBA’s mandated monetary policy objectives, maintaining low and stable inflation and focusing on full employment which the board has defined through its target for consumer price inflation of between 2 and 3 per cent on average over time, she said. This had been the centrepiece of monetary policy since the early 1990s and was well understood publicly as a result.
“This inflation target is central to monetary policy because it contributes to the economic prosperity and welfare of Australians in two ways,” said Ms Bullock. “The first is by avoiding the direct damage that high inflation does to households and businesses. High inflation erodes the value of savings and reduces the purchasing power of households.