China leaves benchmark lending rates unchanged as expected, despite Fed rate cut

Good morning, Chair and members of the Committee. These hearings are an important part of the accountability process for the Reserve Bank and my colleagues and I are pleased to be here to answer your questions. I’m pleased to see the new members of the Committee. As you would be aware, the RBA’s mission is to promote the economic prosperity and welfare of the Australian people, now and into the future. We do this by conducting monetary policy with the aim of maintaining low and stable inflation and full employment, and we also support the stability of the financial system. But our responsibilities go beyond this – we work to support a reliable, efficient and competitive payments system, deliver efficient and effective banking services to Australian government agencies and provide secure and reliable banknotes. There have been some important changes at the RBA since we appeared before the previous incarnation of this Committee in February. From 1 March, the amended Reserve Bank Act 1959 came into force, creating a new Monetary Policy Board and a separate Governance Board. And since we last met with the Committee, the Monetary Policy Board has lowered the cash rate target – our key monetary policy tool – by a further 50 basis points to 3.6 per cent, following the 25 basis point cut decided by the previous Board in February. I will start with some background to these monetary policy decisions and the outlook for the Australian economy. I will then make some remarks on the payments system and banknote distribution. I will finish off with an update on our progress towards achieving the objectives of the RBA Review. RBA Governor Bullock: excess demand could be higher in economy, labor market results may exceed expectations. RBA Governor Bullock: recent rate cuts to bolster spending RBA's Governor Bullock: made real progress in lowering inflation but our job is to ensure it remains within the target range in a sustainable manner RBA's Governor Bullock: also risk that recent pick-up in growth in domestic economic activity is not sustained

RBA's Governor Bullock: need to be "very focused" on data in period ahead RBA Governor Bullock: inflation risks on both sides RBA's Governor Bullock: Australian firms lack dynamism of overseas counterparts