Transcript of Question & Answer Session Remarks by Andrew Hauser, Deputy Governor, at the Walkley Foundation, Sydney

Of course, I’ve welcomed scrutiny and now I’m really going to get scrutinised. I’m a little bit nervous. What’s the collective noun for a room full of investigative journalists? That’s a question to the room.

Andrew, thank you so much for coming. You’ve been here for less than a year and you’ve caused quite a stir among some commentators, labelling those who claim unwarranted certainty about economic outcomes false prophets, charlatans and buffoons. How accurately did you predict the negative reaction you got?

Well, thank you for that question, Adele. Normally a lowball one to start with, but you went straight for the high ground. I suppose it’ll be downhill from there. The point of, actually, that particular quote that you - the point of the speech was actually a speech about the importance of public – humility for public officials, to be clear about what we don’t know, because it’s a great deal, and to be clear that we’re all learning, frankly, together. In that context, saying you are 100 per cent sure about something, which central banks themselves have often done in the past with their lines, "inflation will in the next year be 2.157%", well, you know, with 100 per cent certainty that that forecast is wrong. You need to embrace and understand the elements of uncertainty to be effective policymakers. The particular quote you made was actually an attempt to try and suggest that actually quite a lot of that public commentary was framed around one group of people saying the other group of people were buffoons. Not me saying that anyone was a buffoon. That was definitely not the point. But I’ve actually been quite pleased, I think, that over time people have come up to me and said, "Look, do you know what? The things you were saying in that speech were important." I got stopped in the street one day, and being from London I thought, okay, here it goes, I’m about to get mugged or something, and a bloke reached out to me and he said, "Look, I want to shake you by the hand." He said, "Look, thank you for coming. Thank you for saying those things", and that does make quite a big difference. So I’ll make sure I get the - what’s it called? Don’t bury the lede. Is that the right phrase? I’ll make sure I don’t bury the lede in future.

Yes, actually, but there were some nasty comments made to you, like the former Labor Senator Steven Connroy, "This new bloke, Andrew Hauser, he’s been to Oxford, but, you know, the recent independent report into the RBA found they were insular, arrogant and overconfident. This bloke needs to buy a mirror because he is a complete wanker." What do you say to your detractors?

I was going to come to this event with a baseball cap, actually, with a big W on it, and I thought that if you asked me why there was a W, I’d say, well, it’s for the Walkleys, of course, and now realise, Adele, maybe I should have actually followed through on that. I was too mean to buy the hat. Listen, serious point, and I made it in the speech, people in public life have to accept that they are subject to scrutiny. We have to stick to what we’ve been asked to do by the public. It’s a hugely important role, and if occasionally you have to roll with the punches, you have to roll with the punches.

Why can’t central banks make predictions about interest rates and where they will be in the future?

So it’s important that central banks make predictions about the economy, about inflation, output, employment, consumption, exports. You know, I could list a lot of them, because that forecast is an essential input to policy making. The different thing about interest rates is it’s not something you’re forecasting from out there. You’re trying to forecast your own actions.

And central banks have explored this. Some central banks, New Zealand is one, the Riksbank is another, actually do publish a line which they say is their best guess of where interest rates are going to go. That might seem quite nice when you first put it out. Oh, well, now I know where interest rates are going to go. But obviously what you discover over time, as the economy evolves, is that that forecast for interest rates proves, you know, about as uncertain as anything else. And the risk is that people lose sight of the fact that those forecasts are conditional on everything else going on and actually somebody did a piece of research looking at one of the central bank’s projections of its own interest rates and when it was first published the financial markets placed almost 100 per cent weight on the forecast. Over time, as that forecast clearly became, you know - as people realised, well, hang on a minute, they haven’t got any special insight into where interest rates are going, the weight that financial markets placed on that projection of interest rates from the central bank went down and down until it hit roughly zero. I think the important thing for central banks is to explain how we see the economy, how we see the outlook, and how we might respond if different things occurred, and I think one of the most interesting things I’ve seen, there’s some press stories around that sort of say, well, you know, the market’s not taking the RBA very seriously, actually would say the exact opposite. When you see pieces of data coming out at the moment on unemployment or labour market or inflation or wage growth, you see interest rates in the market, private sector interest rates adjusting in ways that broadly suggest that those trading in the markets actually do understand pretty clearly what our objective is and what our goals are. That thing, which in the trade is called a reaction function, the reaction to data as it comes out is, I would argue, far more useful than saying, "Do you know what? In a year’s time, interest rates will be X, Y or Z." Because I will tell you the one thing that if anyone tells you that you should say is, "I don’t believe you."

Yes. So in other words, it’s dangerous.

I refer you to my previous question - my answer. I think you might be a professional at this, Adele.

As you know, the cost of living is probably the number one issue for many Australians. What do you say to people struggling to make ends meet in the face of stubbornly high prices and high interest rates?

Well, this is terrifically important, and this is, I think, why you ask central banks like the RBA to do this job at all, and why, despite the difficulties that we know come from higher interest rates, we have to hold our course. Michele Bullock did a speech about this about a month ago or so where she talked at some length about the evidence, both formal evidence and also empirical evidence, of the costs that inflation pose. They hit hardest on people on low incomes, on fixed incomes, often older people, people trying to get onto the housing ladder, people on welfare benefits, and it is poisonous because it gets into absolutely every economic decision. I mean, it’s not overstating things to say that for countries who’ve lost control of inflation more severely than they’ve happened in the past, you quite often get wars or you get civil unrest that come from that, because it is deeply unfair. And so what I say to those people, and we do get around the country and speak to groups working with people who are struggling, that that is why we must stay resilient on fighting inflation. I think occasionally, if I’m honest with you, that point sometimes gets quite lost when people talk about, you know, interest rates coming down prematurely. It’s because we understand how painful high inflation and high price levels can be that we are taking the steps we’re taking.

So inflation is getting stickier. What impact do you think our economy, with so many oligopolies in sectors such as supermarkets, energy, airlines, general insurance have on the stickiness of inflation?

You know, I am going to be careful here because I know there are a number of official inquiries into these questions and I’m not going to be able to add a great deal of light, frankly, to that expert debate. There are a great deal of things that affect inflation. When you look at the big trends in inflation over the past two to three years, the reason why it went into double digit in the UK, for example and, as you say, has proved slow to fall, the big trends in the path of inflation that have caused the misery and discomfort that you describe have been global in nature. And I think I’ll stop there, but it’s just to say that I think, you know, most central banks around the world with different industrial structures and different approaches domestically to setting prices, have faced the enormous challenges that Australia have faced the last few years.

Sure, but I think oligopolies do play a role, but anyway.

That was a statement.

Do you accept that notwithstanding the growth figures, without the Government propping up spending, Australia would be in a recession?

So there are a lot of drivers of output and demand growth in the economy. We try to decompose them, we do our best, but there are a number of different ways of telling the story. I think, to be frank, and I’ve come from an economy in the UK where the debt stock is over 100 per cent of GDP, where the Government deficit is very large as a share of GDP. To be honest, there are bigger issues in the Australian economy at the moment in terms of driving the outlook for inflation, what’s happening or will happen in China, what’s happening in the housing market, whether consumption growth will pick up again in the middle of this year as we and others expect it to do, what’s driving the extraordinary growth in employment and jobs in the economy. You know, I was taught years ago in terms of the interaction between monetary and fiscal policy, you’ve got a different, difficult enough job trying to tackle inflation, stick to your knitting, stay in your lane. I’m going to stay in my lane.

So you’re not going to answer that question. Ok. Given the recent rate cuts in the UK and the US, how do you view Australia’s position in the global economic landscape, and why do you think we’re lagging?

On interest rates?

Yes.

So Australia is obviously an open economy. Its wealth, which is considerable, has been built up over decades of successfully trading in that global economy. Obviously at one time its trading relationship was primarily with the UK, then it switched over time towards Asia and that’s been a very - a source of great growth and prosperity for the country over time. What happens in the global economy matters for the Australian economy. What is not the case is that we have to sort of look at what other central banks are doing with interest rates and say, "Well, look, we must move in lockstep.” Our exchange rate is floating, we must set interest rates in the economy for Australian inflation and not for American inflation or UK inflation or German inflation, and at the moment, whereas inflation in the US has fallen back, you know, close to target, it has not done so in Australia. And what’s quite interesting - actually, I was at Jackson Hole, the sort of summer retreat that the Federal Reserve do a few weeks ago in Wyoming, and heard Jay Powell’s speech where he said look, the time has come - essentially, he didn’t put it in words, but he meant this, the time has come to start cutting interest rates. And he said, look, the reason for that is that we are confident that inflation is now sustainably coming back towards target. We are still waiting for the outlook for underlying inflation to come sustainably back to target. We’re applying the same tests that the Federal Reserve and other central banks are doing, but inflation in Australia, for various reasons, is stickier than it has been overseas, and, you know, as soon as it stops being sticky, we’ll react.

So partly oligopolies. In terms of the Australian economy, what issues overseas concern you the most? Ukraine? China? The Middle East?

It’s funny, isn’t it, because often when people talk about the global economy it’s framed in terms of risks, and you’ve just done it now, and I think it’s right to start there. Our biggest single trading partner is obviously China, so the prospects for the outlook for China are crucial to our prospects. China’s been going through some struggles recently, as you well know, and the room knows. It starts in their property sector, commercial property sector, residential property, but it goes deeper than that. Their enormous growth rates have driven our growth in the last few years and so our interests are very heavily tied in with the prospects in China, not just in terms of whether they get on top of their economy, and obviously they recently announced a very large stimulus package, but also the uncertainties and question marks that will obviously arise about future trading relationships depending on the outcome of elections in the US and more generally in the next few years. So I could actually stop there because I think that is disproportionately a big question mark for us. But I won’t stop there. I’ll go on. It’s good news for us, and as I say, this may be less of a risk and an opportunity that the US continues to grow as rapidly as it has been. It’s amazing, actually, how quickly the US has been creating jobs and generating output and, you know, all to the good. But I think more than anything the weakness in productivity growth that we’ve been seeing is something that you have seen globally, and it requires a global solution. Sorry, I’ve rambled a bit there at the end. The risks you mentioned, the Middle East, the potential fracturing of trade relationships - -

And oil prices

And oil prices - you could run the list - are considerable, and they matter to us because we’re an open economy.

The RBA Review says the banks should take account of climate change risks, but not use monetary policy to address them. How do you see this working?

So I spent, obviously, most of my career at the Bank of England and for a period under Mark Carney, who was obviously Canadian Governor and ran the Bank of England, and he positioned the Bank of England at the forefront of the debate about central banking and climate risk. We took a number of initiatives at that time to take account of climate risks and central banking, starting with stress testing of the banking system, stranded assets, the outlook for residential home loans and the difficulties that that could be challenged by, you know, building houses in floodplains or whatever it might be. What would different transition risk paths look like for the central bank and for the banking system. That’s core to central banking in the UK. Here, obviously, that falls to APRA. On the monetary policy side, big questions about whether we’re going to have a sequence of supply shocks pushing inflation up in the future that we’ll need to take account of in our interest rate policy. I think the area that is more open to debate is whether the central bank should be at the forefront of making the case for tackling climate change. We did so for a period in the UK. That may have moved the debate forward. It also drew the central bank from time to time into the political sphere in ways that needed handling. And I think right now what I would say, for the RBA and for Australia, is that we obviously need to take account of climate risk for our day job, but that our day job, as you’ve been saying in your previous questions - see if we can get an oligopoly reference in - but our day job of bringing inflation down is not done. And, you know, we have to, and I want to double down on our commitment, we have to take that seriously. It’s a big job and we’re not done yet. Perhaps, you know, when you’ve achieved your job you can be given other things to do, but right now we’ve got that job to do.

So what’s your view of the establishment of a monetary policy board and why would it be better?

So this was a recommendation of the review and seems like a good idea. It was adopted by the government. But I am conscious that that proposal is being subject to ongoing political debate in Canberra, and it is a political decision, because in the end of the day central banks are political creations. Society, the public, choose to delegate a really important job to a bunch of unelected officials like me, in some cases foreigners, in some cases described in robust terms by ex-politicians, and we have to take seriously the responsibility that comes with it. So if those arrangements are changed, or need to be changed, it should, and rightly should be, for politicians to decide. So although those proposals, in my view, are a good idea, the vast majority of the RBA Review consisted of things that doesn’t require legislation or agreement in Canberra, it requires changes to be made by us, and as was mentioned earlier, we’re getting on with that. Something like 40 out of the 50 plus recommendations are things that we can just do and that’s what we’re doing.

So how critical is it for it to get through part of the whole changing look of the Reserve bank?

How critical is the board part of it to get through?

Yes.

I mean, it’s a part of it. It’s a part of it. But the review as a whole was recommending for the RBA to become more open, to increase the professionalism and debate and diversity in its policy discussions and, you know, we’re doing that, and we’ll work with the structures that we’re given by government. I am conscious, you know, if you sort of say, "Well, look, come on, just get on with it", that puts us in the middle of a political debate and it rightly is a political debate so I think we’ll leave that to politicians.

I’ve got one more question, but I’m going to - -

Is it about oligopolies?

No, it’s not. I can slip another one in, though. But I’m going to open it up to the floor and then I’ll try and squeeze my last question in.

Thanks, Adele. Thanks, Andrew. So Margie here is going to be our microphone person. Oh, that was sneaky. Okay, so if you head off with your questioning now, I’ll leave this to Adele and I’ll - -

Deputy, I appreciate your comments. I had a question - relates to your speech largely, but you may have seen in our paper we’ve written quite a few articles about the RBA’s private briefings. I wondered if you had any thoughts on that and whether the RBA was considering a change of policy or was reviewing the way they do things. Thank you.

Some of you know David Bold. Before we came in I said, "David, will this be a nice cosy lunch" and he said, "Yeah, I wouldn’t bet on it, really." So thank you for that. Look, obviously I come from the Bank of England. Most of my career has been spent there. I know from my own experience that when crisis hits you need good relationships across the economy. You need to know - you need good links with industry, you need good links with unions, you need good links with public organisations, and you do need good links with the financial sector as well. You need to understand how they think, you need to understand how their business is going, and without that, you do a bad job. And it is obviously the case that the RBA Review that we were just talking about had recommended that if anything the RBA gets out more, frankly, and you know, I’ve been going around talking to people in Australia and some of them have very good relationships with the RBA and some of them have said to me, "Do you know what? We could afford to see the RBA occasionally more. We’ve got things to tell them and we’d like to feel listened to." So we do a great deal in that area, and for me the number one point is that whatever arrangements are in place, that that essential fact gathering exercise is at least as high a priority as it has been here in the past, if not higher still. That’s sort of point 1. Point 2 is, and sometimes people say, you know, "It must be great being a central banker. You’ve got all these secrets." The truth is the dirty secret about central banking is there aren’t many secrets. The biggest secret is, obviously, the interest rate decision. That’s discussed in the Board and it’s put out almost straight away afterwards in the public statement, and from there on in you’re basically discussing material that’s in the public domain. So, you know, whilst - I know sometimes people, including in the financial market, clamour to come to these roundtables in the hope they might hear something that’s not in the public domain, they don’t, and perhaps they go away disappointed. I don’t know. I think - so number one, it’s important for us to listen. Number two, there really isn’t any private information to give.

And number three, I would say, from a central banking perspective, you have to go into those meetings conscious that they’re basically sales events. They’re basically the sell side of the financial system, saying, "Look, here are all my clients. I can deliver to you a senior official and come and hear what they have to say and maybe ask them a few questions." So you have to go in savvy. We’re aware of the debate. We’re aware of what’s been said in recent days and recent weeks. But those are the principles that we’re operating under and we continue to reflect.

Thank you, Deputy Governor, and love the conversation. Narelle Hooper. I was fascinated by the insights on communication styles, and given that RBA is about getting through to about 10% of the population, Donald Trump’s aspirational 75% - -

I didn’t say the RBA. I think it was actually the FOM, the US - -

Or the central banks

Central banks in general. A few years ago as well.

How would - well, 2017. In order to get through to that level of the community, how would you frame the current economic situation and the bank’s stance?

Oh, no. Sorry, you’re asking me actually to - -

Yes.

Oh my gosh. This is a - -

You can do it

It’s worse than yours. We understand that inflation is too high. We understand that inflation is harming your family and your business, if you own a business, and your way of life, and we’re determined to bring it down. That’s why interest rates are at the level they’re at. We’re monitoring the outlook closely. But you can trust us that we will do what it takes to bring inflation down.

Andrew - -

Don’t ask me that again. That was winging it, I can tell you.

Andrew, Shane Wright from the SMH and The Age.

Hi, Shane.

I just want to go back to your speech, and Montagu would have really struggled, Greenspan would have really struggled with where communications are for the bank. You’ve touched on it as an unelected official, but the importance of what the bank does in setting interest rates, it affects people’s employment, it affects their wages, it affects the small business, it affects the large business. So much power has been delivered by democratically elected government to central banks since the mid-nineties. You’ve seen Liz Truss, Kwasi Kwarteng, you’ve seen Trump, you’ve seen plenty of Labor MPs express displeasure about where the bank is going or making their decisions. Do you think ultimately there will be a - there’s a tension between the democracy encapsulated in the parliament and also the unelected officials who have so much economic power over the lives of so many people?

This is a tremendously important question and probably deserves a conference rather than a two-minute answer. I would start by making the point that independence for central banks is a political decision. Governments, the public, can give central banks independence and they can take it away. When you look at the long history of central banking, the vast majority of its time, and it goes back centuries, you haven’t had anything approaching the kind of independence that’s been granted since the 1990s. I think you can probably argue that the economic benefits of granting that independence across countries has been positive and has held, until recently anyway, has held inflation low and allowed economies to grow and employment to grow in ways that have been beneficial to millions, if not billions of people. But you have to be, as a central banker, conscious of the conditionality of the job that you’ve been given. In the UK it is granted through legislation. Parliament can upturn that legislation. In RBA, in Australia it’s slightly different in the sense there is primary legislation, and then there’s also the statement on the conduct of monetary policy that defines more specifically what the regime is that we work under. Obviously the public policy case for delegating authority to the central bank is that other efforts over time to hold inflation low proved to be less effective. In particular there was an impetus, and people recognise this, there was an impetus to inflate the economy in certain periods when in fact it would be better to deflate it. That tension that there will be a sense of, "Oh, if only we could ease policy a little bit now, wouldn’t everyone be better off in the short term", which would be damaging in the medium and longer term, is exactly the reason why people argue that independence is a good thing. But I think you only have independence if you are accountable to parliament, to the public, through you to parliament, through parliamentary scrutiny, and through our performance. And look, I’ll be honest with you, the last few years for central banks have been periods in which that performance has been questioned. Right? The drivers of inflation have, by and large, been things, I would argue, that have been beyond central bank’s control. Obviously COVID, obviously the crisis that followed Ukraine, and more recently, other drivers. But you’re entitled to question and challenge that, and Shane, you often do, and long may you continue to do that. And the important question is to central banks, are you doing the job we delegated to you because we thought it was in our interest as well as you possibly can? And when the answer to that is, frankly no, then I would expect that that mandate for central banks will be withdrawn. So far I hope central banks have proved, after perhaps a shaky year or two, that inflation globally is coming down. It’s coming down in Australia. It’s not coming down as fast as we would like, but it is coming down. And most importantly of all, you know, employment continues to grow, which is in our remit, that you and everyone in this room and everyone beyond this room will continue to give us, you know, this vital role. But it is conditional and, you know, if at some future point the public view is we want to take it away with all the consequences that that might have, then I’m sure that will be a debate to be had.

Thank you very much for your address. Kirsten Aiken from the ABC. The Governor has continued to emphasise that the Board is very much data dependent, looking backwards to confirm what is happening in the economy. Given the widening war in the Middle East, will the RBA Board now have to look forwards also to take into account possible disruptions to oil supply and upward pressure on the price - on inflation?

This is an important question. To state the obvious, and a room full of journalists, I mean, the Middle East has been unsettled for some time now, and actually through that period the oil price has been flat to falling slightly. The analytical basis for that is that, by and large, the countries that are the marginal providers of oil have not been caught up in this conflict. The US has obviously become much more self-sufficient in oil over that period. Saudi Arabia has kept the taps on, et cetera, et cetera. So although if I probably ask most people in this room, and perhaps even me, to draw what you thought the oil price might have done over the past two years freehand, and you’ve probably drawn the line going up, in fact it’s been flat to slightly falling. It’s picked up a little bit in the last day or two as some of the question marks over the outlook in the region have increased, but it’s still materially below where it got after the Ukraine invasion and so we have to watch it closely. I think, I guess - sorry, long-winded answer. To shorten it, we’re keeping a close eye on that, as we do on many risks. So far I wouldn’t put it top three.

Would the RBA hold off on a rate cut because of the risk to supply? If it did look like, for instance, Israel was going to lodge a fairly large scale attack against Iran and key infrastructure?

We only make decisions on interest rates based on our outlook for inflation and employment as a whole. So we’d put it into - if the scenario you describe occurred and, you know, oil prices began to rise sharply, that would be a factor in our outlook for inflation. Obviously to some extent if you had a pickup in oil prices you might expect that activity and output in the industrial sector would fall. So it might have negative implications for some other drivers of inflation. So whether or not that would be a one-for-one increase in inflation or have some offsets would take some time and effort to analyse. You would never base your interest rate decision on one single factor, whether it’s that or oligopolies or anything else. You put it in the mixer and you make an overall evaluation.

Andrew, Edward Boyd at Sky News. The past couple of press conferences Governor Bullock has basically said, "We are not cutting interest rates at all this year. You can forget about it."

Is that a verbatim quote?

It’s not a verbatim quote, but it is the general vibe, if you watch the whole 45 minutes that she normally speaks. But is that getting dangerously close to providing forward guidance, something you promised you wouldn’t ever do again? And I note in the minutes today you’ve kind of become a little bit more dovish as well.

Wow. Where should I start on that. The kind of forward guidance - and we were talking about earlier with Adele - that all central banks have to do is they have to talk about how they would react depending on how the future economy evolves. And, you know, I was just leaving the Bank of England when Ben Bernanke who used to run the Federal Reserve was doing a review of its forecasting performance during the last few years and one of his recommendations was that actually the Bank of England, and I think by implication other central banks too, could usefully start talking more about what you might call those if then statements. So if x happens, our view about policy would be y, and what the minutes that you describe that came out this morning attempt to do is to make a start on that journey. I don’t know whether I describe "we remain vigilant to upside risks to inflation" as being a particularly dovish message, but you’re the journalist, not me. You know, as the minutes say, I think actually on the month since the last meeting the Board’s view was that there wasn’t actually very much news in the data. So I think, look, we’ll continue to describe how we see the outlook for the economy and we’ll continue to describe how we expect we might react to that outlook and I think that’s what, frankly, Michele was doing in the press conference when someone put to her, "Well, look, you know, not sure the market’s taking you very seriously because the future interest rate curve is falling", and she described how the Board saw the outlook.

Hi, Andrew. Lucas from The Fin Review. I just wanted to pick up on a point from Jonny’s question, these private briefings that the RBA does. If they’re effectively sales exercises for other banks, you can’t say anything that’s not already public, and two banks have already broken the trust of that private briefing exercise, what’s really the point of doing these private briefings?

There’s one big point, and it’s really incumbent on all of us as public officials to make sure that those meetings focus on it, and that is to hear what is going on in the wider markets. I just come back to the point that the Review stressed that the RBA needed to get out of the building to listen more and to understand how the economy and the financial system was evolving, and it’s that part of the process, the listening part of the process, that is important. I’ve spent a considerable amount of my time, because I’m new here in Australia, trying to travel around the country rather than hang around in the 200 square feet of Sydney CBD, to hear the different elements of the wider real economy, the mining sector down in Adelaide, in Townsville, travelling right around the country to talk to businesses. Now, of course they want to hear your perspective on policy, but the thing that I find interesting, and actually one of the most, frankly, inspiring and energising parts of my job is to hear how people’s businesses, how their family affairs, how their finances are evolving. And it’s that listening part of the process that it’s vital we do. We must do it on appropriate ground rules, but it’s vital that we do it in order to set policy and respond to the kind of challenges that you’ve been making at this lunch.

I mean, how good is the RBA at listening then and how has that evolved? Like when you came in, were they good at listening?

I don’t know because I wasn’t here, but I know what good listening looks like, and I intend to do it myself and I know my colleagues do too.

Thank you.

Thank you. Amelia Brace from Seven News. Two more very quickly, just following up on the briefings. If they are more about listening, should we change what they’re called? Would that ease the confusion? And quick follow-up from my colleagues in Canberra, noting that you said you didn’t want to forecast, could you predict or speculate whether we should still not expect an interest rate cut this year?

Exactly, I can’t criticise them for trying. I don’t know what the - on the first point, I don’t know what they call, to be honest. The biggest single effort that the RBA makes, which is on the real economy side, is called the liaison team, and I think "liaison" is quite a good word, to be honest. It does involve the idea of a two-way exercise. Yes, we tell economists how we see the economy. In part it’s the rather awkward question about, "Can you summarise the outlook of the economy?" Being able to translate our view of the outlook for the economy for businesses up and down the country, many of whom, frankly, don’t have the time to read all of our complex output, is part of the service we provide. That’s the transmit bit. The listening bit is the other half of liaison. So maybe we should call it liaison. I don’t know whether they’re called briefings or kind of not. On the outlook for interest rates, I mean, the only thing I’d say, to be honest, if I told you where interest rates were going, the right response from you would be, "Yeah, whatever." I mean, I don’t know. So there’s a whole bunch of data that’s going to come out between now and the next meeting and the meeting after that, and we’ll sit around in the boardroom and we’ll discuss it. And, you know, where interest rates will go either in that meeting or in the subsequent meeting - it’s not like I’ve got it in my head and I just won’t tell you now. I genuinely don’t know. And so your rational response, if I said to you that interest rates were going to X, Y and Z - I nearly gave a number there and I realise that would have been a mistake. Exactly, it would be great for you, even greater for your contact from Canberra. But your rational response would be like, "Well, okay, fine. Some guy said they’d be X per cent." But I don’t know, and actually, I would encourage everyone to have that attitude of kind of, you know, sceptical scrutiny of what people tell you when they claim to know where interest rates are going, because they don’t.

Thank you. So my last question was actually about the briefings. This is an on-the-record briefing, which is very different to what The Financial Review has been talking about, which is off-the-record briefings, and I quote from The Fin where it’s saying, "The Fed in the US has rules that say it would not be appropriate to hold a private meeting with selected clients of a profit-making entity to discuss monetary policy." So it’s really - it’s just not a good look. What’s your opinion of it? Do you think that they should be, like this one, on the record rather than off the record?

Great. I can assure you the dry nature of much of our liaison over time, I think if we put it on the video people would probably say, "Dear God, can you please stop?" There’s hundreds and hundreds of hours of it every month. Let me start on the real economy side of it, and we meet hundreds, if not thousands of companies every year. We do that privately, and we do that so that they can tell us how their individual business is doing, how their pricing decisions are evolving, how their employment decisions are evolving. They often give us information that in their industry, and for that company, would be highly commercially sensitive. We don’t obviously have any particular interest in that commercial sensitivity. What we do have an interest in is building up from that picture of individual corporate feedback, a picture of the economy that is timely, that is well informed, that it has a good regional basis to it, and which is also based on one-to-one contact where we can ask the question why. And aggregate economic data do not answer the question why, they just tell you the number. I am pretty confident that on that real economy side, if we said to them, "Well, look, sorry, mate, but we’re going to have to throw as much light on those private conversations", they’d come with a speech, they’d read it out, we’d learn nothing and the society would be less well off as a result. So in that context - I understand that’s not directly the question you’re asking, but I do think - I want to make that clear, that actually in order to have a rich and deep contact base, which helps all of you in the wider economy and the room, it is important that we treat the information they give us about their individual business confidentially, whilst using the aggregate picture that we derive out of adding it up to inform monetary policy. And for what it’s worth, we don’t tell the Board members, you know, that company A or company B has said this, because obviously that could itself be something that would be breaking a confidence. I think - I’m only going to repeat what I said earlier to the AFR. We’ve heard the debate. We understand. I’m used to a different setup in the UK. I am relatively - you said I’ve been here a year. I’ve been here about six months, so - -

I said less than a year.

Or less than a year. It’s a lot less than a year. What is crucial is that whatever regime we have going forward it maintains and enhances that flow of information into us, because we owe it to you lot to do the best we can at monetary policy.

Right. But it will have processes in place.

There are processes already. I think this is an important point. I mean, I don’t want anyone to go away from this thinking, well, gosh, you know, we’re just sort of letting it all hang loose. That’s not how central bankers operate. There are ground rules, clear statements at the beginning of each of each meeting, and, you know, process. This system is not light on process. You make an interesting point about cross-country comparisons, but please don’t go away from this thinking this is all being done without process. That’s not the case.

Thank you.