Transcript of Question & Answer Session Fireside Chat at the 2025 AFIA Conference

Thank you for joining us. I’m just going to do a quick recap of what I heard from Paul because that was a lot of information about the kind of context of where we are before we kick into some questions. Retreat of globalisation. Trade being used as a bit of a sort of states craft policy, you know, tariffs being a beautiful word. We’ve got challenges. Housing undersupply which has intergenerational implications. Transition to low-carbon future which has profound implications, including adjustments to capital. We’ve got governments who are still challenged by, you know, post-pandemic issues in relation to, you know, stubborn inflation, although good news for us in Australia. Supply demand issues. Other pandemic-related issues which are socio and economic driven and AI, and we can touch on that a bit. In terms of the Australian context, huge benefit of economic ties to China. Weaker productivity, supply capacity at its limit. How do you feel about everything that Paul just said? And, I guess, you know, what’s the economic outlook from the RBA’s perspective?

I agree. Thank you for having me here today. It’s an absolute pleasure to be here and I’d just actually like to quickly acknowledge the traditional owners and custodians of the land on which we’re all gathered here today and it’s a beautiful Sydney day. As you say, definitely no need for the fire. So there’s a lot going on in the world right now. I think there always is as an economist but that feels particularly true at the moment. I think what’s interesting for us is, as Paul sort of made reference to, the last couple of years we’ve really been trying, in terms of our policy setting, to bring inflation back down.

So as Paul highlighted we had inflation almost at 8 per cent at the end of 2022 and we’ve been really trying to bring inflation back down, starting with the cash rate hikes - more than a couple of years ago now. And we think - yeah. We hope, indeed, that we’re pretty close to getting inflation back at target. It’s almost there. As Paul said, we’ve put through three cash rate cuts this year. And in the context of the labour market and our mandate, we also think that we’re pretty close to full employment, but maybe there have been some pockets of tightness in some parts of the labour market that we’ve still been able to see relatively recently. For example, if you try and get a tradie that might still be a bit of a challenge. If you’re in Brisbane, it’s definitely still a bit of a challenge. There’s still some strength in some parts of the country, out west as well in Perth. So the economy we hope we’ve achieved our mandate, but touch wood we’re always looking at it and monitoring it.

Going forward from here I think what we really expect to happen at the moment, based on our August forecasts and they were predicated on the market path at that time, which was for another couple of cash rate cuts or so, we think the economy is going to stay, in terms of inflation and the labour market, about where it is right now. We thought that inflation in underlying terms, so core inflation, would stay around about the midpoint of the target band and we think the labour market, in terms of the unemployment rate, participation rate, things like this, would stay about where it is at the moment. So we’d get employment growth over the next couple of years but it would be to match population growth. Really what we’re trying to say with that forecast is that we think the risks around the outlook are broadly balanced. So we can see reasons why we might have a softer economy than that.

Paul talked about the international environment. We’re certainly monitoring China. We’re certainly looking very closely at the labour markets and how the sort of - the pickup in private demand sits against - might be some moderation in the non-market parts of the economy, so employment growth in those parts of the economy has slowed quite sharply this year. Equally we can see reasons for some upside, potential upside outcomes. Maybe there’s still some strength in those parts of the country I was mentioning earlier and that could keep, sort of, capacity up and keep inflation and that may be a little bit above our target. And so we’re trying to balance those things. And the forecast at the moment we think the outlook is broadly balanced but we’re monitoring. We’ll wait and see. We’ll see how things play out and the Board will set policy accordingly. So we never quite know. But right now we hope that we can keep things where they are today.

Can we go a bit deeper on the, you know, setting your opinions and then what goes to the Board really for the decision in terms of, you know, the factors that go into a rate decision. I mean, Paul and his friends have got lots of opinions around - or just before decisions are made and, you know, up, down, sideways, whatever it might be, usually down late and a couple more before the end of the year. Without speculating too much on it, what are the factors that go into the decisions, globally and domestically, because there is a lot of change and uncertainty, and you’ve talked about, we think we’ve got the balance in the risk environment about right. What feeds into the thinking behind those decisions?

Yeah. So lots goes into it. And you’ve probably heard from a lot of economists at some point or another say to you, monetary policy acts with a lag. And what we mean by that is that when we set the interest rate today, when the Board set the interest rate today, no matter what they do, if they change it or if they hold it at its current level, they’re really having an impact on the economy over the next nine, 12, 18 months. So the impact immediately is not actually that large. It builds over time, hits a peak and then it comes off. So we’re actually trying to judge what we think is going to be conditions in around about a year’s time and it’s that policy today in response to that. So we have to be forward looking in everything that we do.

Now, the data, as it comes in, is obviously a key input into that. What has happened, why has it happened and what does that tell us about the outlook going forward, because there’s always momentum in the economy. We’re always considering what’s going on overseas and things can change. Obviously US policy settings have changed quite substantially this year. We didn’t have that as our forecast base case a year ago but we’ve had to adapt to that and what that means for the rest of the world as well. And, of course, we’re always very conscious that our judgments and our views and our assessments, they’re not always right. You know, forecasting, sometimes you do get it right and we’ve had a good run just recently. Quite often you don’t. You get surprised by something and you have to learn from that, and we want to talk to people outside of the building to hear what they’re seeing and their assessments, so people like Paul and other market economists. I meet with them regularly. We hold roundtables. Academics. And we also have our business liaison program. So we conduct around 900 interviews a year with organisations right across the economy, right across the country. We have offices all around Australia and it’s how we really gather in that sort of qualitative information, from people who are actually on the ground. So we don’t want to be in an ivory tower. We actually have to be out there in the economy finding out what’s going on. And the numbers can’t tell you everything. So it’s a lot that goes into the decision. It’s very forward looking. We obviously prepare papers for the Board and then they have their discussion and debate. I can promise you it’s very rigorous to be sat in the room with them and you can hear the different perspectives and then obviously they come up with their final decision at the end of the day. But it’s a lot and it is forward looking. Data is important but it’s not the only thing.

On the data - I mean, industry here has a lot of our own data. I’m interested in the stories or the feedback that you’re hearing through those networks you were just talking about. I mean, what’s the sort of financial conditions, credit growth stories that you’re hearing? Consumer, household, business, small business, big business. Is there things that you’re hearing that go into the - sort of the melting pot where we used to sort of say, oh, we have a two-speed economy. Do we? Or do we have a multi speed economy? What’s going on?

Well, I think my first sort of top line comment on that actually would be there’s always a different experience across the economy. So it’s always the case that some sectors will be running a bit faster than other sectors. Some parts of the economy will also be growing faster than others. I mentioned Queensland, where we can see things are pretty robust at the moment. A lot going on there, Western Australia as well. On the other side of it we can see that Victoria has perhaps got some slower momentum than other parts of the economy and those sorts of dynamics have been true for a while now and they’re not atypical. So there’s always a bit of variety and heterogeneity. You can never say that everyone’s experience is the same.

In terms of what we’re hearing generally, from a business credit perspective actually lending to businesses is growing at a pretty healthy pace. It’s certainly not booming. It’s nothing like with the early 90s or anything like that, but equally it’s picked up a bit from its lows. Household credit has picked up a little bit as well. This is generally mortgage credit. That’s what most households are borrowing to finance the purchase of. And we’re seeing a bit of a pickup there, particularly in investor lending. And in terms of what we hear from liaison, it’s interesting not many businesses are telling us that access to credit is a constraint on their operations at the moment. Again, some people will be constrained by that. We know some pockets and some types of firms can be particularly constrained, start-ups, small and medium-sized enterprises. They tend to have more of a constraint on average than anyone else but it’s not all of them. But we’re not really hearing any signs that credit availability is a particular challenge right now. And so that’s comforting to hear and that does suggest that the private sector pick up that we’ve now started to see in the data, there’s no reason why credit at the moment should be a constraint on that.

Yeah. We’ve certainly heard the Government say it’s time for the private sector to take over now. And I think that there is obviously some partnerships, public, private partnerships and then some incentives going on into the private sector, particularly in the green space, to make sure that is the case. Before we kind of might even go into sort of the net zero space, I’m interested in housing. I’m not going to ask you to predict the next interest rate change. How are you seeing households and housing and mortgage stress from the RBA’s perspective?

Yeah. So for - so to take households, and so here I’m talking about household spending, consumption, before I get to the housing market. Households - conditions look like they’re starting to improve. So a number of the fundamentals there have started to turn over the last year or so. We’re now in a position where wages are growing faster than prices, so wage growth is higher than inflation. So the average person, the average worker, is now taking home more in real terms than they were a year ago.

That’s obviously -

That is a very important dynamic for household income. Absolutely.

Yeah.

And therefore for consumption. We’ve also got the stage 3 tax cuts that came in a year ago. They’ve been there a while but they’re obviously a help, relative to before that. And then if you’ve got a mortgage, yeah, you’ve had three interest rate cuts. If you’re on a variable rate mortgage, you should have seen those flow through, at least to some extent. Most of the banks have passed those on. So for households, conditions are improving. But, again, it’s always heterogeneous. So everything I just said would be true of your average mortgage holder who’s got a job or maybe they’ve got two incomes but both people are working. If you’re a retired household who doesn’t have a mortgage, you might have some savings in the bank that you’re getting interest income from, then not all of that is going to be true. Yes, lower inflation is definitely helpful for that group. It’s helpful for everyone and that’s why it’s so important. It’s at the core of our mandate, of course, along with full employment. But, you know, different groups are going to experience this differently and we’re actually seeing that in some of the spending data that, sort of, owner occupier with a mortgage group, we’re actually seeing some strength relative to the owner occupiers without a mortgage and they’re typically your older people in the community.

So household spending looks like it’s picking up a bit and we’re seeing that in the data and in the high frequency data too. And in terms of stress, there are always people that are in difficult circumstances. We know that. And it can be particularly challenging. Those people are still there and it is really difficult for them. But generally, systemically, if you like, those measures of stress have started to come off as household income has improved. So we think that for households we’re, on average, past the worst of it, if you like.

Yep.

The only final thing I’d say about that is that in terms of the price level, the thing we are all still adjusting to, is the cost of living is now higher.

Yeah.

And we are not trying to bring the price level down. My own personal, sort of, price point on this is milk. Get it in the supermarket every week. Milk is an awful lot more expensive today than it was pre-COVID, and I still catch myself on that even now. The price of milk will not go back to where it was pre-COVID. Same thing for bread, other staples, petrol and so on. We’ve all kind of got to get used to that but we know it’s tough and it does sting a bit, right, when you do your weekly shop it just costs that much more. So that price level dynamic, we think, is still causing some challenges for people, weighing a bit on confidence perhaps. We hope that that’s going to abate away. As inflation stays low, that’s what we’re trying to do, of course, and we all sort of adjust and get used to that.

And then on the housing market side, so we know interest rate cuts do flow through to the housing market. You can see it, sort of - and every cycle. And so the housing market has started to respond this year. We’ve seen a bit of a pickup in prices growth. As I said, a bit of a pickup in terms of investor mortgage lending. So that dynamic is not atypical. Our assessment is that it’s actually happening the way we would expect it to, more or less. It’s totally within the, sort of, normal bounds. The challenge in the housing market is, of course, supply, which we’ve been talking about for some time. Everyone’s been talking about for some time. And there on the supply side I think that’s actually facing a number of headwinds. I’ve talked about them, actually previously in a speech. We know, again, lower interest rates improve project feasibility. That’s inevitable. You reduce the cost of capital. But it’s not the only constraint. In fact, when we talk to developers and others in the sector they’ll tell us about, still some labour shortages for some types of skilled workers. The high cost of construction, the planning approval process, all of these things that really make it hard to get a project off the ground and get it done and delivered. So that supply side is more of a structural challenge. Interest rates don’t really have a role to play there. But we know from what we hear from liaison that is still a challenge.

Now, before we move into, sort of, I guess, the business or commercial part of the economy, just back to households. It’s maybe too soon to see in the data, because it does have a lag effect in terms of changes of interest rates and whether that affects spending and/or saving. RBA obviously keeps an eye on the, sort of, savings to debt ratios in households.

Yes.

We have seen pass throughs of interest rates. Some are just getting embedded into paying off their mortgage quicker. Some are starting to use those savings, in terms of increase in spending capacity. Is there a story there that’s emerging? Are we seeing more saving than spending going on?

Yeah, it’s a good question and it is a bit of a mixed picture. What we’ve seen over the last couple of years so through, I guess, the start of this year was that households were trying to rebuild their savings rate. So the savings rate fell very, very low as people chose to save a bit less, spend more to cope with inflation and then their everyday living costs and they’ve started to rebuild that buffer, if you like. And through the first half of this year, which is where we’ve got the best data, the savings rate was a bit bumpy. We had some weather events at the start of the year, insurance payouts and things, that were distorting the data, but it looks like it might have, sort of, levelled off but we really don’t know yet and we’ve got to wait for the data to see that. The other thing that we have seen since the interest rate cuts is that some people, like you said, they may not have reduced their actual mortgage payments so they’re putting more into an offset account or a redraw account, and we have seen that coming through the data. We’ll be monitoring that very closely to see if that, sort of, tapers back down a bit. If people, sort of, choose to reduce their repayments, their total repayments. So obviously you’ve got to meet your minimum.

Yep.

That’s a good question going forward from here and actually it’s one of the key questions for us, what is the underlying strength of the recovery in consumer spending? It’s a key factor in the economy. It’s something we’re going to be monitoring very closely.

Yeah. I mean, I don’t think we’re sort of standing on the aircraft carrier yet going, yeah, we’ve beaten inflation and then -

No, absolutely not.

- recovery.

And our job is to worry. You pay us to worry. This job, for my stress levels, is a challenge, I have to say.

Are you okay?

We’re always going to worry. We’re going to worry on both sides. We don’t want high inflation. We know how challenging high inflation is for the community to deal with. It’s incredibly hard for people like you to make the decisions you need to make. How do you know if a price increase is just inflation or if it’s actually demand for your product? And we know it’s so difficult for many in the community to deal with. If you’re on a very low income and you don’t have a buffer, and suddenly the price of bread or the price of milk goes up, that’s a really hard thing to swallow. How do you manage that? How do you put food on the table? Pay your electricity bill and so on. So we want low inflation, but we also need to make sure that we don’t go too far the other way and that the economy stays at full employment. That’s really important too. We don’t want to see people out of work unnecessarily. We’re not targeting a number of people out of work, not at all. We want the economy to be just in balance. You know, just right. A bit of a Goldilocks outcome. That’s what we’re aiming for. You know, things will knock us about and we’ll get shocks down the track for sure. We don’t know exactly what’s coming but we really want to get that balance right for everybody.

Maybe we need some more finfluencers or wellbeing experts on the net saying, it’s cool to do a budget. Construction, you mentioned, can be tight in some parts of Australia. We’ve got some commercial lenders here, as well as consumer lenders and lenders who do both. So I’m interested in your reflections, sort of, across Australia or within, you know, maybe different states. Is this being driven by economics, supply of equipment or lack of supply, perhaps some challenges there, natural disasters? What do you think is impacting construction, mining and resources, ag, sort of big sectors for us?

Yeah, and important sectors for us. So maybe starting with construction. I think the - construction there’s still, across the whole country, a really substantial pipeline of work to get done. There’s the residential challenge we all know about. You know, the need to build more homes. But there is also a really strong pipeline of what we call nonresidential construction. So that can be hotels and office blocks and things like that, hotels up in QLD, for example. It also covers things like social infrastructure, hospitals, schools, these sorts of things. With a growing population we have got to do that. You know, kids need somewhere to go to school. We need those hospitals and things like that.

And then, finally, there’s the big infrastructure projects. That’s your road, your rail. The renewable energy transition would fall into that bucket as well. So there’s just a lot to get done. So whenever I talk to people in the construction sector they’re not short of demand, generally speaking. Some parts of the country that might look a bit different but overall they’re not short of demand. What they’re worried about is how the sector can get it all done with the capacity it’s got. So that’s a question of structurally, labour, availability of materials and things like that as well. That that seems to be improving. Certainly much better than it was during COVID when it was really hard to get hold of the materials you needed. But, yeah, if I talk to the sector it’s that sort of balance between what they can supply and the demand they can see coming down the pipe.

Yeah. And do you think it’s labour market driven as much as other things?

I think it’s the whole capacity. And we know that the construction - if you try and do everything really hard all at once, we don’t have generally the capacity to do that right now is what the sector is telling us. And so I suppose for me what I’ve been really monitoring is how does that all shake out, what do we do, what don’t we do, what might that mean in terms of inflation and the cost base, and obviously that really matters for us, but what is it that we actually get done over the next few years because it is a real challenge.

I’m interested to talk about technology. I mean, AI gets a lot of conversation at the moment. We’ve done an AI report recently which we’re pleased that made its way into the economic reform roundtable discussions. You know, we did some modelling with KWM, and it’s here if people haven’t caught up with that report, please have a look at it, up various models but up to 60 billion in additional GDP in the next 10 years in financial services without structural reform. So, you know, kind of, I’ve been saying to some pollies in Canberra, that’s a gift. You know, let it happen. Regulate it sensibly. Let it happen. In terms of technology and AI, are you guys already factoring this into your modelling in terms of the implications for markets and labour market particularly but also and into our productivity agenda?

Yeah. It’s a really great question. And so the way that we’re thinking about AI that economists, I think, generally think about AI is what we call a generalist technology, which means it can be applied right across the economy and to pretty much every sector. I wouldn’t quite say all because I’m sure there will be an exception but you can think of it that way. And as a generalist technology then these things tend to take years and years to fully roll out, be adopted. We learn how to use them and then they really - you get the pay-offs from them.

So there’s a very famous economist called Robert Solow who was talking about the - if you call it the first technology of revolution of the 80s and the 90s, who said at the start of this that you can see this everywhere except in the data. Everyone’s talking about the fact they’ve got personal computers. We were learning to use Excel and Word at that point, that sort of stuff, but can’t really see it in the data. It came through much later. More of the late 90s and the early 2000s, and I think it’s that kind of roll-out. Maybe we can do it quicker this time and if it does give those kind of benefits that would be great, but it does take time, I think. So we’re not really seeing its impact in the data just yet but I’m not surprised by that. It’s clearly here. It’s clearly an incredibly powerful technology. The Governor actually spoke about this in a speech just recently and made the point that, there are some of what we do in our day-to-day jobs the AI will be able to do for us, and that will be great. And I think that’s those more repetitive tasks, the automating tasks that you can sort of - you have to do now but maybe the AI can take on for us and that’s great. But I do think there will always be a role for humans, we’re the decision-makers. We’re also the ones who can cut the edge. Who come up with the genuinely new ideas. Who can push the envelope. In fact, one of the things we’ve all got to do to fully take advantage of this technology is work out how to use it and how do we change and transform how we work to take full advantage of it. I’m not sure that the AI is going to tell us the answer to that question.

So I think there will be a use for us, which is the good news. So it’s not going to get rid of all jobs, but it will change jobs and I think that’s inevitable and that’s going to play out over a number of years, I think, and if we can harness some of those benefits you talked about and if they’re as large as you talked about, that would be transformative and that would be fantastic for the economy, and for the country it will improve our living standards and just mean that we can make some really - you know, choices about what we want to do and how we want to do it. If you’ve got a bigger pie per person, as it were, makes those choices a lot easier. So I think that that’s a really exciting frontier.

Yeah. An interesting question I hadn’t thought of asking, you know, AI how to get rid of itself. I wonder what it would say? I’ve been in conversations recently where I’m kind of slightly disturbed by this, that some people are referring to their AI friend with a, he or she tells me this. Oh, dear. Anyway, before I wrap up the questions, I’ve got time for maybe one question. Anyone got a burning question for Sarah - Dr Sarah, I should say as well, we have a doctor in the house. All right. Do we? Do we? Yep. One.

Thanks, Sarah, for that, David Taylor from ABC News. If you look at the price, this is sort of looking at commodities markets. If you look at the price of gold, especially in the last few weeks, it’s pretty clear that something is going on. I mean, it’s risen exponentially. History would tell us that’s because millions of investors around the world are looking for a safe haven, somewhere to put their money that’s safe. In your experience as an economist, what is this huge spike in the price of gold telling you? Are we headed for something that we’re not yet prepared for? Is the Reserve Bank looking at the price of gold? What is that spike telling you?

Yeah. So we’re always monitoring conditions in financial markets, as you might imagine. We have an entire financial markets group, in fact, who are responsible for that and also for how we operate ourselves in financial markets and implement monetary policy. So, yeah, so we’re looking at gold, along with a range of other commodities, a range of other asset markets, equities, bond markets and so on. I think we’re seeing at the moment some interesting developments in financial markets. Clearly a lot is changing, in terms of the policy settings, the structural underpinnings for the global economy, not so much here in Australia, and participants in financial markets are responding to that. There is always a risk, of course, that you can have a market correction and that can - clearly that will send waves through financial markets themselves and can easily spill over into the local economy. That’s our financial stability departments who monitor that and are paying attention to those risks. So they’re always on our horizon. We’re always paying attention. We don’t see anything very immediate in front of us. But that’s not to say that something couldn’t develop, and if something develops then we’ll respond. That’s what we’re here to do.

So when I say we’re here to worry, I worry about the economy and I’ve got a colleague who worries about markets and I’ve got another colleague who worries about financial stability and the payment system and we all, sort of, obviously work together and we’re all working ultimately for the Deputy Governor and the Governor so they can deliver good policy. So, yeah, if something happens, rest assured we’ll be on it. And there’s clearly a lot of change playing through the global economy and markets and that’s what we’ll be monitoring over the coming months and years. Some of these things can take years to play out.

Just down the front here.

Hi Sarah, Stella from Reuters. We just have a question about the monthly CPI number from July. That came in pretty - not only the headline figures but also the underlying measures that came in on the high side. Just what’s your view on that? Like what should we interpret?

Yeah, sure. No, good question. So I’ll give the usual health warning, with the monthly CPI indicator at the moment, I use that word very deliberately. It’s not a complete dataset right now. The ABS are actually launching the complete one at the end of November for October which is super exciting for us. We can’t wait to get that. We’ve been waiting a long time, so thank you to colleagues in the ABS for getting that over the line.

It’s so much fun to see someone excited about CPI.

I know, I know. Let me nerd out for a minute. So just to make that point, the reason I stress that is because the indicator is very volatile. We’ve seen that in the past. That is true now and it will be true for the next few months, while it exists and then it will obviously be put to bed once we get the full data. And, in particular, the trimmed mean metric that gets reported in the monthly indicator really isn’t comparable to the quarterly data that we do look at. So we really don’t look at that series. We don’t think that it’s a good read. And what we do use the monthly indicator for though is looking at the individual components, and so they give us a view bottom up on what might be happening at a top level. In terms of the data in July, there was definitely some timing going on that I think caught a few people out. Certainly we were looking at it and it wasn’t quite what we were expecting around the electricity rebates. That’s a timing issue. That’s not a fundamental issue.

So - and we’ve been looking through those rebates for some time anyway. They have an impact on the headline CPI that’s now lifted up. We were expecting that. So we weren’t surprised by that. You know, timing aside. That will keep going as the rebates play through the end of this year and then through next year as well as they fully roll off. We’ve been anticipating that. It’s not going to surprise us when we get that. In terms of underlying inflation though and the dynamics there, it looks like it’s broadly coming in line with our forecast and what our forecast has is really not any further disinflation. So we think that underlying inflation, quarterly trimming inflation is going to stay around about where it is at the moment, which is around about the middle of our target band. And the data in July, as much as we get from that first month and it’s not a lot, was consistent with that. And so, yeah, I’ll just caution, don’t get caught on the headline. We know that that’s going to track up and it’s going to go up probably further from where it is now because of those rebates rolling off and then it’s going to come back down. We’ve been anticipating that for quite some time, a couple of years now, and it’s playing out as expected.

Elle’s giving me the wrap up so question, key trend or risk, or the thing really keeping you up late at night for the next 12 months? What’s the -

Yeah. Well, I certainly can’t depart too far from the international conditions and how they play out. There’s a lot of uncertainty and unpredictability in that space. So we’re monitoring that very, very carefully. The US, yes, but how that emanates to the rest of the world and what happens in China. And then locally I think it’s just - whether that balance I’ve talked about, whether we see that holding or whether we tip one side or another, it’s this sort of balancing act. The forecasts look very perfect at the moment, I know, but really it’s a reflection of that balance. And what we’re going to be monitoring is whether or not we think that balance is, sort of, tilting one side or another. Those are the two things, I think, that will keep me awake for a while.

Well, speaking of the US, on the 16th of September in 1992 the number one song was the End of the Road by Boys to Men. In the UK it was Ebeneezer Goode. I totally forgot about that song.

Dear oh dear.

The shaming. Where would we be without that? Given your accent, I’m going to make a little bit of a prediction that UK is relevant and the question about, what were you doing in 1992 is not an offence to you.

No.

What were you doing in 1992 in September?

I was - so - like I was still growing up, so I was living at home with my parents. I do know what you’re referring to though. This is the ERM crisis. So where the UK crashed out of the Exchange Rate Mechanism. The Bank of England pushed up interest rates very high to try to keep the pound in, failed and they crashed out. I have quite a vivid memory, so I wasn’t that old, but I do have a memory of this, both of it being on the news, but actually my own personal lived experience after that was really, I guess, illustrative of the damage that can happen when an economy goes through a really big downturn. My dad ran his own business, small business. His business nearly went bankrupt so my parents got divorced. So that period of time actually had profound implications for my immediate family that have echoed all the way through to today.

And so, for me, the lesson from that period is how powerful policy can be for good or for bad, monetary policy in particular, and how important the mandate that we have as central banks really is. Low inflation is vital. It’s vital for the community and for the business community. It’s also vital that we try and achieve full employment. I wouldn’t want anyone to experience what my dad and my family did, as a result of a policy decision we make. Absolutely not. So balancing those two, that balance I talked about, for me it’s actually something I - a lived experience and it’s very real. And so that’s why we’re all very motivated at the bank to do what we do and to deliver for the country.

Just before the session started I mentioned to Sarah that I was going to mention 1992, and Sarah immediately shared that story with me. So that was not set up, by the way. So, again, ideas connect. I think when we look back on those moments in time, in 1992 and what feels like an immediate challenge, can very easily demonstrate to have a long-term effect and that long-term effect can be on institutions, it can be on politics, it can be on families, it can be on nations, and I think that’s the sort of stuff now that, you know, eyes wide open. While we might be looking around the world and going war, WTF, we’ve got a moment in time that’s going to impact the future. And I go back to, what are we as an industry going to do? Sit by and silently witness or be part of creating a solution for the future? Thank you, Sarah.

Thank you.