Michele Bullock: A monetary policy fit for the future

Speech by Ms Michele Bullock, Governor of the Reserve Bank of Australia, at the Australian Business Economists Annual Dinner, Sydney, 22 November 2023.

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

Thank you for inviting me to speak at the ABE's annual dinner. I spoke at it last year as Deputy Governor. Little did I know I would be speaking this year as Governor.

I am going to talk about two things tonight. The first is current monetary policy, which I suspect is what many want to hear about. The second is more future focused – the changes that the Reserve Bank is implementing to our monetary policy processes.

The nature of our inflation challenge

But first to our inflation challenge.

As I am sure you are all aware, the Reserve Bank Board raised interest rates by 25 basis points at its November meeting. This followed several months when rates were held steady. An important consideration in the Board's decision was that both economic activity and inflation have been a bit more resilient over recent months than expected. Inflation is past its peak and heading in the right direction, but it is likely to return to target a bit more slowly than we previously thought (Graph 1). As such, the Board decided that a rate rise this month was appropriate to be more assured that inflation returns to target in a reasonable timeframe and to balance its inflation and full employment objectives.