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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 will start with a discussion of the inflation situation and the economic outlook. I will finish with an update on our priorities in the payments space and the cash distribution issues that the industry is dealing with. Inflation The Reserve Bank Board’s mandate is to contribute to the welfare of the Australian people by delivering price stability and full employment. This mandate is set out in the Reserve Bank Act 1959. The Statement on the Conduct of Monetary Policy, agreed between the Australian Government and the Board, sets out how this works in practice. Specifically, we have agreed with the government that the best way of achieving low and stable inflation is to aim for annual consumer price inflation of between 2 and 3 per cent. While all outcomes within that range are consistent with our price stability objective, the Board sets policy to return inflation to the midpoint of the target. But the agreement with the government provides flexibility around the timeframe in which we meet our inflation objective. This is because we need to balance meeting our inflation objective with our full employment objective – achieving the maximum level of employment that is consistent with low and stable inflation. The reason I set this out is to give context to the Board’s current strategy for monetary policy. The Board is trying to bring inflation back to target in a reasonable timeframe while preserving as many of the gains in the labour market that we have seen in the past few years. This is the so-called narrow path. post: RBA GOVERNOR BULLOCK: FOCUS ON POTENTIAL UPSIDE INFLATION RISK post: GOVERNOR BULLOCK OF RBA: BALANCE CURRENTLY CORRECT BETWEEN INFLATION AND EMPLOYMENT post: RBA GOVERNOR BULLOCK: TOO EARLY TO CONSIDER RATE CUTS