Guy Debelle: Uncertainty

Text of the 7th Warren Hogan Memorial Lecture by Mr Guy Debelle, Deputy Governor of the Reserve Bank of Australia, Sydney, 26 October 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Uncertainty is one of the few certainties in monetary policy decision-making. It enters at nearly every stage of the process - from understanding where the economy is at the moment to knowing where it will be in the future. Tonight, I will discuss some of the main ways that uncertainty affects things. In doing so, I will draw on the 'Superforecasting' template described by Philip Tetlock. I will also discuss the monetary policy reaction function, which is one area where we can try to minimise uncertainty.

In describing these various manifestations of uncertainty, I will outline some forthcoming changes to the way uncertainty is presented in the RBA's Statement on Monetary Policy. The intention of these changes is to portray uncertainty in a form that is usable and understandable. I would also like to discourage an excessive focus on false precision.