Speech Fireside Chat at Nomura 100^th Anniversary Event

(start of recording missed) The other interesting thing I think is, you know, economists often are made fun of, ‘cause we talk about, on the one hand the other hand, and let’s say central bank governors or central bankers tend to be even more ambiguous at times. I’d say not this Governor, but I used to work with Michele the early nineties and perhaps ‘cause of how you’re a country girl and you’ve grown up in rural Australia and Dale, you’re a, I think a pretty straight talker. And with that we can get into it. Sure. Michele, thank you very much for coming here. A great pleasure for us.

Sure. Thank you for having me. And I was just telling Rob, I apologise if I sound hoarse before I left, My little 1-year-old granddaughter gifted me with this cold. So I’m now, so I apologise and hopefully my voice stays strong for this.

It sounds good.

Sounds alright so far.

Have some water? Okay, well let’s get going. So there, there is a Slido and so I do have an iPad here. If you do have questions when we’re talking, please input them and I’ll put them into the discussion. So look, let me, let me start Michele, with just your general view on the Australian economy. It seems like activity is maybe perking up a little bit, but also it seems that inflation might be a bit stickier than, than we thought. Can you just kind of give your overall thoughts on where we’re with the Australian economy?

Sure. So I might just go back and give a little bit of context. So like many countries, we had inflation in Australia peak sort of towards the end of ‘22 in our case at 7.8 per cent – much higher than it had been decades and certainly higher than it had been throughout inflation targeting period. And the strategy of the Reserve Bank Board was a very, a very deliberate strategy to raise interest rates. We raised interest rates very quickly from practically zero to 4.1 per cent, the cash rate. And then we ultimately raised it a little bit further to 4.35. But we, we did that very quickly, much more quickly than we’d done in the past. But we had a very deliberate strategy that we didn’t want to raise it more than we had to, to bring inflation down. So we were actually quite criticised for not following the lead of some other central banks who took their interest rates up at the above five. So it was a very deliberate strategy of the Reserve Bank Board to try and bring inflation down within a reasonable period because we wanted to try and maintain the gains we had in employment. If you’d said pre COVID, we could have an unemployment rate with a four in front of it, no one would’ve believed it, but it got down to three and a half in the midst coming out of COVID and that that was too tight. There was labour shortages, there were big issues there. But 4.2 per cent at the moment is good.

So where are we at? We’ve got inflation now back in the target band. Headline inflation is a little bit volatile because we’ve got subsidies, government subsidies particularly for energy which are swinging that around. But if you look in underlying terms, it’s gradually come down and it’s, it’s now 2.7. A little bit of recent data suggests a couple of things. The first is that we have been predicting that the economy would start to turn, particularly consumption would start to turn because real wages have been rising and also wealth has been rising, particularly in the form of housing prices and equities. And those two things usually result in a, in an increase in consumption. And we are seeing that and I’d have to say the most recent data suggest that’s been maybe a little stronger at the margin than thought. The second thing is that inflation, a couple of things in the most recent, although monthly data for inflation, for those of you who don’t know, we have only a monthly indicator. It’s not a full monthly CPI, we are getting that in November, so yay. But at the moment we’ve just got this partial indicator and it’s very volatile. We don’t put a lot of weight on it. But most recent data suggested that there were a couple of elements, in particular housing dwelling/building costs and market services inflation, looked a little stronger than we’d been expecting. So those two things together, activity looking a little stronger, the labour market still judged possibly a little tight, it’s a bit uncertain but possibly and inflation looking like there might be some elements there, so those sorts of things are at the back of our mind. And I think we talked about that coming out our latest board meeting that that these sorts of things were giving us a little bit of time to think about whether or not there’s more reason to come or not. And, but certainly if you stand back, it’s actually good news. The economy is turning, inflation is back in the band. We just want to make sure we keep it that way.

It seems to pretty balanced overall the economy right now and fully agree with you – when you look around the world, you know, you go back to when all the central banks were raising rates, there was a lot of talk about the RBA should have been faster in raising rates. But perhaps off you actually preserved a lot of the employment at 4.2 per cent.

And as I said, that was a very, there was a very deliberate strategy and, and look, you know, the job’s not done. My job – I’m paid to worry, and I still worry. But we, we have a legislative change now which makes it very clear that we have a dual mandate. It’s inflation and unemployment. But having said that, if inflation gets out of control, that is ultimately bad for employment. So we really need to make sure we try and balance that.

Okay, so let’s stick to inflation because when it comes to inflation, we need to talk about and kind of decide how much slack there is in the economy. And I think it was the, the August monetary policy statement you had three risks, and I think one of the risks that you highlighted was that maybe excess demand may be a bit more than you judge. Where is the RBA in terms of its thinking around the amount of slack in the economy?

Sure. So I think at the moment we think we are probably close to balance in terms of the output gap, but it’s very hard to judge these things. And ultimately inflation is what tells you whether or not you’ve got an output gap. The employment, we think it’s still marginally a little bit tight, but we look at a lot of different indicators of the labour markets. So those two things suggest to us that maybe it’s a little bit tight but it’s close-ish to balance. I should comment that when we were raising rates and then we held rates for a period of about 13 months, and some people were saying, look, the economy isn’t growing, the economy isn’t growing, you should be lowering interest rates. And what we were trying to explain to people was that coming out of COVID – supply of the economy was growing at trend, and we can talk a little bit about that if you like but it was growing, but demand coming out COVID had increased so much that it was well above for supply capacity of the economy. So we had to slow demand down just to bring it back down towards balance. It was well above the ability of the economy to sustainably supply those goods and services. And I think that’s basically, we feel now we’ve sort of achieved that. How fast demand can now grow depends on how fast supply grows and that’s when this whole issue of productivity comes up.

Well let’s talk about that because the RBA has lowered productivity forecast a bit. But the thing that I found interesting is you’ve also lowered your projections of aggregate demand as well.

That’s right.

Can you explain that a little bit more?

Sure. So one of the, one of the puzzles for us in our forecast was that our labour market and our inflation forecasts were sort of coming out in line, but we were completely overestimating demand. One of the things that we think partly explained that puzzle was that we were overestimating productivity growth. So we adjusted down our growth in productivity assumption for the next couple of years for our forecast period down from 1 per cent to 0.7 per cent. And what we think was happening was that businesses and consumers were, what we are observing was they were adjusting to the lower productivity already. And so that’s why inflation and employment were coming in where we were forecasting, but we were expecting demand to pick up more quickly and it wasn’t. And we think that the thing that married those two was the fact that we were overestimating productivity. Our new assumption means that demand of say GDP growth of around two is probably a long run or you know, for the next couple of years that’s sort of consistent with supply response of the economy. So it does mean that you can’t grow as quickly and it means real wages can’t grow as quickly. That’s what, and that’s why for those of you who watch what’s going on in Australia, there is a very big focus on productivity. The government is very focused on what we can do about productivity. I would argue that we at the central bank can’t do anything much about productivity. I think probably the best we can do is keep inflation low and stable and that gives businesses and consumers the best environment in which to make good decisions.

Including investment, which can increase productivity.

Including investment that can, that’s right.

Okay. Let’s switch gears a little bit. We talked about Australia just on the global economy. Michele, I’d like to, you know, there’s still a lot of uncertainty out there and yeah, markets seem to be taking it all in their stride and maybe, maybe it’s the AI transformation that is really driving all that. But as you said, central bank is, are paid to worry. Can you talk a little bit about your thoughts around the global outlook?

Yeah, sure. So yes, every meeting practically I go to everyone comments on the fact that the markets seem to have a very goldilocks view of what’s going to happen in terms of the macroeconomy. You know, you’ve got credit spreads very low, you’ve got equity markets booming, it all seems as if they’re discounting really bad macroeconomic outcomes. The risks -- so from Australia’s perspective, we’ve been thinking about this in terms of what it might mean for the world trading system because as a small open economy we’ve done very well out of open trade. And for us what’s really important there is potentially the impact on Asia. Our direct exposure to the United States is fairly limited. We don’t expect, and Australia has got the very low 10 per cent tariff rate with a couple of sectoral things. So for us, really the more important thing for how we might be impacted by the global circumstances is the flow on effects and the indirect impacts that might come through Asia and in particular China. So at the moment I’d have to say that we -- back I think it was the May Statement on Monetary Policy. We did a couple of scenarios, we did what called a trade war, which was a like, you know, very bad. Everyone retaliates and world trade basically collapses in on itself and that would’ve been very bad for Australia. But I think our central projection is for, yes a bit of a slowing in in world trade, a bit of a slowing in China but maybe not too much. And that ultimately that would be a little bit deflationary for Australia. But I think at the moment it seems that the very worst outcomes we were thinking about possibly have been avoided. It doesn’t mean that there’s not a lot of time to play out here. The effects of this are going to play out over the next few and you know, if tariffs are maintained and others put on tariffs as well, these are all going to have impacts which go out some time. And ultimately it isn’t good, we talked about productivity, it’s ultimately not good for productivity because resources aren’t necessarily moving to where they’re most efficiently used and of best use. I understand why this is happening and you know, to be fair, there has been a tendency over the last few decades for increasing frictions in world trade – this has just been a bit of a step change, if you like. So I think at the moment our central projection is things will slow bit, it’s not going to be disastrous, but I also think that the very, very seemingly rosy view of the markets probably isn’t right here. There is going to be I think a long running impact.

Okay. So a rockier path …

Possibly and look, you know, part of the issue here is it’s not just uncertainty, it’s unpredictability – you just don’t know what might come out tomorrow morning. And where there’s general uncertainty I think people can sort of deal with that, sort of know the distribution but with unpredictability, sometimes you’re talking about very fat-tailed distributions – things could go one way or the other. And so I think that’s sort of a little bit of the challenge in the world we’re in.

Right. Sticking to kind of the world view but bringing it back to Australia, you, we talked about how Australia’s in a pretty good spot in terms of pretty close to trend growth and inflation is within the band right now, but also the fiscal side in Australia is, is very good – one of the few AAA nations. But you, you know, linking it to the rest of the world there are, there are challenges and we’re seeing gold prices go through the roof and people talk about there’s no alternative to the dollar and so there’s a million to gold. What’s the chances that Australia will be shone in a much brighter light as you know, being one of the ones that are as you said, a good spot and could start to get a lot more interest for foreign investors?

Well it’s possible and certainly in some discussions I have, there is that feeling I get from people that they are interested in what’s going on in Australia. I mean we are a big resource exporter obviously and we export a lot to China but we have more than just iron ore - we’ve got a lot of gold as well. But more than iron ore and coal, and rare earths obviously is one of the ones that is getting a lot of discussion. I think though, a couple of things. Coming out of COVID and like many other countries there is more of a focus of the current government, and I understand why, on security of supply chains and Australia’s security of its of its own manufac-- not manufacturing so much but there’s certain things that we’d like to think that we could continue to do ourselves. So security of our supply chains, I think that is getting more attention in Australia, as it is elsewhere. I don’t think it’s manifesting in tariff barriers. I think the government has made that very clear that we we’re not going to be retaliating with anything with tariffs. But I do think there is still a bit of a security focus on making sure that we control our own destiny a little bit and we’re not dependent on others. So there’s that. The fiscal situation, yes, it is when you compare it with overseas, it does look better, but it still gets a lot of attention in Australia. Because if you look at the forecasts for the current government forecast, there are deficits out into the foreseeable future. Quite substantial ones because spending is growing very quickly and revenue’s not as strongly, obviously. So there is a big debate in Australia about how does the government get its fiscal position into a more sustainable -- make hay while the sun shines, while we’re doing well. If we can’t make the budget stronger during this period, while the economy is doing quite well and there’s lots of people employed, then what happens in the next downturn? I know it’s a question that resonates around the world as well. And even though we look, we are in a better position than many – our debt to GDP ratio is 30-40 per cent, it’s much lower and we’ve had a couple of surpluses and a relatively small deficit, the most recent one. But still people in Australia are a bit concerned about what it might mean going out.

That’s interesting because the budget deficit just recently came out is under 1 per cent of GDP, there’s not many countries that are talking about fiscal consolidation with such a …

Yes, it is. It is.

That’s good. Okay, let’s shift from fiscal to monetary policy and you know, of course, r star, everyone you must get asked a thousand times, how devilishly difficult it is to actually estimate. And I think the RBA has various models where it can be anywhere between 1- 4 per cent, so very hard. But at the same time as a central bank you have to kind of gauge, you know, the stance of monetary policy. Where, where would you gauge the stance right now? Very tight, tight, neutral, loose, very loose?

So we use, and I think my colleague Chris Kent is giving a talk, I’m not sure if he’s already given it or it’s later this week, but he’s talking about how we think about financial conditions. And yes we do think about, we do have models with the neutral rate but we are not slavish to those models because as you said, they’ve got very wide error bands on them. And it’s a long-run concept in the absence of shocks, where might neutral be. So the sorts of things that we look at, we look at regularly, are what’s happening with credit. It’s often something that tells you a little bit about financial conditions. We look at longer-term interest rates, including what markets are thinking is going to happen to short-term interest rates. So a little bit of, if those sorts of conditions are easing, then that that sort of is easing financial conditions for borrowers. Some of the other things we look at are, we often present a graph in our Statement on Monetary Policy which shows mortgage repayments because in Australia, it’s not the only mechanism through which monetary policy works, but the cash flow channel is quite an important one because we have a high proportion of variable rate mortgages. So what we look at is what’s happening with required repayments on housing loans and that gives us a bit of an idea of that pressure on budgets. Interestingly, in Australia what we’ve observed is that as scheduled repayments have come down on interest and principal, households have, you know, on average sort of maintained their payments. So they’re putting more into saving and so they’ve got some buffers above what they need. So they’re the sorts of things we look at. So what I’d say in answer to your question is we don’t think policy is really restrictive at the moment. We likewise don’t think it’s accommodative. I would say we think it’s marginally tight, but ultimately the test of that is going be what happens with inflation and demand. So once you’re getting around about where you think you need to be, I think that’s where it becomes quite uncertain. And you know, there are some models, I know the market sometimes focuses on the average of our models, which I think suggest the neutral interest rate is about three. It might be, it might not be. So I think at the moment what we’d say is probably still a little on the tight side, but not much. And there’s a fair bit of uncertainty about it.

Okay. That’s looking at monetary policy but then you could broaden that because monetary policy transmits through, you touched on that a little bit, various other interest rates, loan growth, house prices, the Aussie dollar, the equity market. When you look at kind of broader financial conditions, a financial conditions index, how would you characterise that now in Australia?

So, and this is, I guess what I was alluding to, if you look at some of these other things, some of these things are suggesting that policy certainly isn’t as tight as it was. Housing prices is one thing we’re observing and that is one of the transmission mechanisms of monetary policy. On the other hand, there’s a lot of folks in the cash flow channel, but there’s also the intertemporal channel. So higher interest rates encourage people to save more now and that’s what we’ve observed. But if we start to see people consuming a bit more, as some of the data suggests we might be, then that’s indicating for us that the channels are working as we’re easing interest rates. But remember we only started lowering interest rates in February, we’ve gone down three quarters of a percentage point in that time. Some of that is flowing through, but there’s still, we still think it’s, you know, 12 months that monetary policy takes to flow through.

The long and variable lags working their way through.

Yes. The long variable lags, that’s right.

Okay. But ladies and gents, I’m getting quite a few questions coming through if you want to vote on them, I’ll be very democratic and, and weave in the ones that are most popular. Michele I want to talk a little bit about monetary policy framework and strategy. So in 2023, the RBA had this independent review to strengthen the monetary policy framework. Can you talk us through how the RBA is adapting to some of those new innovations and procedures?

Yes, so there’s some very obvious things. So one of the recommendations was fewer meetings, so that we would have more time to do analysis. There was a bit of a feeling that with monthly meetings, it was sort of a bit of a treadmill and we were a bit too focused on the day-to-day. So we’ve done that. The other obvious thing we’ve done is institute press conferences, and the statement now comes from the Board rather than the Governor. They’re the obvious things. What’s going on behind the scenes at the Bank? Well we’ve reworked our processes. So we used to have a meeting, one meeting to sort of discuss the economic conditions and then monetary policy recommendation would be made in a paper and sent to the Board. Now we have a series of lead up meetings. We have sort of a, just a discussion about the current economic and financial conditions with lots of different people. The idea isn’t to make a decision. The idea is to make sure everyone is on the same page or at least everyone has had an opportunity to put in their views. We’re trying very much to get out diverse views rather than thinking. So that happens early. We also have meetings of individual departments where staff get to put their views into meeting as well. And then we have a, what we sort of call a pre-policy discussion where we discuss what the strategy might be, and we’ve tried very much to start introducing scenarios. So we are making much more use of “what ifs” and we use some models to do that. Models aren’t perfect obviously, but it gives you a bit of a flavour. So we trying very hard to, when we talk to Board, not just talk to them about what are we going do this month, but what might a path look like or if certain other things happen, what might that imply for the Board’s monetary policy strategy. So that’s in, there’s more modelling capability that we’re introducing there as well. So there’s a whole lot of things under the hood and I’d say if you ask me in a nutshell what we’re trying to achieve is we are trying very hard to get as many different views onto the table as possible. And this was a point about the review, so that we thought broadly about what the possible implications might be if we’re not right in our central scenario, what might be the implication. So this is really, and it’s still a work in progress finished. But it’s, I’d like to think it’s quite a different process and a different journey that we we’re trying to go on.

Okay, excellent. Look, I’d like to get your views on central banks and the RBA’s use of forward guidance. It seems to me that there’s times when forward guidance can be useful, but also times when it’s perhaps less useful and kind of where do you think we are right now with regards to the use of forward guidance?

Well, some central banks use it quite a lot and still use it. As you know, I’m very gun shy of forward guidance. When it was used by my predecessor Governor Lowe back during COVID, there were good reasons why it was used, I think. And it was used as part of a policy package including a yield curve target for three years, term funding facilities, forward guidance on interest rates. So it was all trying to make sure that we kept funding costs and financial conditions as easy as we could. So there was a good reason for it. Unfortunately, and maybe other central banks haven’t had the same issue, the qualifications around it were never picked up in Australia. So hence the interpretation that the Reserve Bank Governor promised that there would be no interest rate rises until 2024. If you look back at what he said and so on, he didn’t promise anything. It was qualified, but the qualifications never got picked up. And so for myself, I think that would I rule out not doing it, never doing it again? No, I wouldn’t say that, but I think it has to be in very particular circumstances, and I would also think that we would want to think very carefully about how we were positioning it along with other possible tools. One of the things that we also recommend is we undertake a review or set out framework for alternative monetary policy tools. And that’s something we will do. And I expect forward guidance will get picked up there.

Okay, because my impression is now with the Australian economy close to balance and still a lot of uncertainty out there, forward guidance may not be so useful at this point in time. But I guess the challenge is, you know, if forward guidance, you can have a very strong forward guidance or a weaker forward guidance, but it does help guide markets and avoid big surprises in markets. I guess the challenge for, I’d love to hear your view, but right now with the RBA is with no forward guidance, there is the risk that markets could be surprised at some point.

Well we did surprise them actually, we surprised them in July, when everyone expected us …

So how do you think you can get out, is there ways to, because you don’t have to always give it at the Monetary Policy Board meetings, but in between the meetings as you get more flow of data which gives you a bit more certainty of where you’re heading, is there ways, for instance – could more of the board members do more regular speeches or things like that?

Yeah, I think, and I was asked this question actually after that July meeting, why didn’t you come out and say this earlier? Part of the problem is that the board makes a decision, so I can’t actually pre-empt what the board might decide so that’s part of the challenge. And the same would go for individual board members coming out and saying, they can only say, they can only sort of give their view. They can’t tell you what the board might ultimately decide. And on that occasion, you’ll recall we had a 6-3 split. It was our first time that we released unattributed votes. So I mean I think we are trying very hard to give the market an idea of the sorts of things we are looking at to enable them to figure out what they think our reaction function might be. I think what happened in July was they read something into the data, which we did not read at all. And so maybe the lesson from that was that we weren’t clear enough in explaining how we use the data and the limitations with it. But you know, at the moment I think, given the experience we had back with the previous Governor telling people what we think will happen with interest rates in six months’ time, I am still very gun shy of that frankly.

Right. Yeah, fair enough. Okay, so I’m trying to weave in some of the questions here. So Aussie house prices are reaccelerating, which isn’t seemingly now being driven by immigration. Just to paint a scenario, if inflation does gradually come down and it gives room for the RBA to cut rates further, if house prices really start accelerating and you get more riskier lending, how will that be dealt with?

Yeah, so another thing that’s come out of the review is that we now have a bit more of a structured process of liaising with APRA. So, APRA is the macroprudential authority. They’re the ones who have the tools, the macroprudential tools. So what our concern is there, it’s not house prices per se, which are the issue, it’s as you said, it’s if that turns out to result in much riskier lending, people chasing housing. So we’re alert to that and that’s where we are talking to APRA, we’re talking through the Council of Financial Regulators, we’re identifying what the potential risks might be. One of the ones at the moment, and we’ve highlighted this in our recent Financial Stability Review, is that investor lending tends to respond more quickly to interest rates.

So we have observed that. Investors can exacerbate housing price cycles. So even though they mightn’t be riskier borrowers, they can exacerbate housing price cycles, which means that others can get caught if they’ve got risk lending. And we’ve observed that in the past. So that’s one thing that we’re on alert for and APRA is also on the alert for. And so they’re the sorts of things we’ll be watching. But again, you know, I can’t really control housing prices. And if we focus on the financial stability side of things, then we’ve got to work with APRA to try and address those things through macroprudential tools.

And there’s very close collaboration on that.

It’s very close collaboration there and the review recommended we put in place more arrangements which we are doing.

Okay. We talked a bit about China and there’s a few questions here I think, given what’s been happening with the US-China renewed trade tensions, asking the question if the tensions do ultimately lead to the threat of the US administration of a hundred percent tariffs on China, what would be the effect on the global and Australian economy? Maybe you can talk about the Australian economy.

Yeah, sure. So couple of things up front. First of all, we have observed trade flows have been quite nimble so far. Now that’s partly because what we’ve observed is that under the current tariff regime, Chinese exports to the US have fallen, but they’ve found other places to go. Some of them have gone to other Asian countries, some to Europe. Now there’s a whole question if they increase tariffs quite dramatically and that effect is bigger, that does raise in my mind the risk of retaliation or at least defensive strategies from some of these other countries, which would be bad for the world economy. I think part of the problem in China at the moment is that they are, I mean they’ve got deflation effectively, and they’ve got lots of production and competing provinces competing down the prices of many manufactured goods – cars is a good example – and then exporting that to the rest of the world. There is a challenge with China and it’s, you know, I think this is being pointed out by the IMF and you know, the authorities say they understand it but they’ve got a massive population. If they can encourage the consumption side of that, that would be very powerful for their economy. But they’re still focused on this export-led -- so if the tariffs go up, I think there potentially is quite a lot of disruption to the world trading system. I think it potentially raises the risk, as I said, of defensive strategies from others. And ultimately I don’t think it’ll be good for the Chinese economy either because at the same time as they’re trying to solve this problem of oversupply, the government hasn’t really done anything at the moment that is addressing the long-run issue of consumption in the Chinese economy. So I think the risks are much higher in those circumstances.

Right, there is this … campaign. You also need demand.

That’s right, you need demand. And Chinese consumers, if they’re not confident then they’re not going to consume.

Yeah. Okay, last question for you Michele, because we’re almost out of time. The Australian superannuation industry, which is the pension fund sector, has been growing in leaps and bounds. I think it’s almost like maybe 160 per cent of GDP, something like that. So in the RBAs Financial Stability Review that came out earlier this month, there was a discussion how if the super fund industry continues to grow at this rate, it’s going to continually need to increase its investments offshore in order to diversify. But that that does pose the risk of FX and liquidity risks and that could, given the size of the super funds, it could amplify stress in the domestic financial sector. Can you talk about that a little bit and what the RBA is guarding at, looking at for that?

Yeah, sure. So it’s really, we are looking at the interconnections between the super funds, the Australian banks. So the super funds hold a lot of Australian bank paper for example. They increasingly hold, as you mentioned, offshore, but they also hold relatively illiquid investments as well. So equity investments in things that aren’t necessarily easy to sell off. So I think the concern is that as they’re still in the accumulation phase, that won’t always be the case, but as they continue to accumulate assets, the extent to which the liquid assets are held in things like bank paper, if there is outflows, if they need to liquidate quickly, then that could actually have impacts on the financing of the Australian financial institutions themselves. So there’s this link here. There’s nothing much we can do about that. I know APRA has been doing a lot of work on liquidity with super funds, but I think the other thing that we are quite concerned about, and we raise this in the Financial Stability Review as well, is it’s not just super funds, this is across the board, this idea that financial risks might coalesce with operational risks, and the two things coming together might make things worse. So examples might be at the same time as you’ve got ructions in financial markets you had in April, say like where you’ve got big volatility, if at the same time there was a cyber attack, say. Those two things coming together could make things much, much worse than just a financial crisis or, or an operational one. So what we are trying to think about is how those sorts of multifaceted risks might eventuate. Again, not much we can do about it, but you know, APRA again, we are doing a lot of work in thinking about how do we make these systems more resilient, operational-wise, how are institutions addressing operational risk, how do they recover. So I think that’s also a really important part. It’s not just about the liquidity and the financial markets, it’s also about this extra facet.

Great. Michele, we covered a lot of ground. Thank you very much for stopping by.