Michele Bullock: Economic conditions in post-pandemic Australia with a regional lens

Speech by Ms Michele Bullock, Governor of the Reserve Bank of Australia, at the Rotary Club of Armidale Annual Lecture, Armidale, 8 August 2024.

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

Thank you to Rotary Club of Armidale for hosting me today. And a worthy cause raising funds for the University of New England SMART Region Incubator. It is particularly good to be standing here in Armidale where I grew up and went to university. I see many familiar faces in the crowd, including school and university friends, and parents of friends. My school maths teacher. And last but not least my parents who have come back to Armidale to hear me speak today. I am really thrilled by the turnout here.

I will do two things in my speech today. First, I will briefly set out the Reserve Bank Board's framework for setting monetary policy and then give some context for the Board's decision on Tuesday to hold the cash rate steady. I will then talk about economic conditions in regional Australia since the pandemic and offer some reflections on challenges and opportunities facing these parts of the country.

How the RBA sets monetary policy

The mandate of the Reserve Bank Board is to contribute to the economic prosperity and welfare of the Australian people by delivering price stability and full employment. In practice, this means setting monetary policy to keep inflation between 2 and 3 per cent and employment at the maximum level that is consistent with maintaining low and stable inflation. We achieve this by setting the interest rate on overnight loans between banks ('the cash rate'). The cash rate influences other interest rates in the economy, affecting the behaviour of borrowers and lenders, economic activity and ultimately the rate of inflation.