Transcript of Question & Answer Session The Ghost of Christmas Yet to Come

Normally we go straight to the floor but, Andrew, you’re a bit of a rock star. When we published that you were going to speak tonight, I received several texts from several economists, really excited that you were going to talk. And so I thought instead of going straight to the floor, that I’d just start off with some light questions. And then the microphone on the right will be for media, and the microphone on the left will be for nonMedia. We will try to prioritise some of the nonmedia questions first. But I thought I’d just start off with the fact that you started in February. So you’re almost coming up to your one-year anniversary. You’re enjoying the sunshine. You get eight hours of sunshine in Australia on average, versus the frost in London. But what have been some of your highs and lows since you’ve started, and they might be work highs and lows, or they might be personal highs and lows, whatever you want to throw in?

Some people in the audience are laughing already. I don’t know why they think this is going to be a humorous response. Let me start with a serious point, because it is a serious point. It is a huge privilege to be here. It’s actually very rare. I think someone should write a paper actually. How many foreigners are asked to help set monetary policy in other countries. It’s small. Obviously I come from a country in the UK, Mark Carney as Governor and that was a big event there. I’m obviously not the boss in Australia, but nonetheless it’s a small number of people that are asked to come and do that and I think you can only be very humble, genuinely I mean this, about the responsibility that that, sort of, gives you. I mean, it’s exciting and great and stimulating as an economist, as a person, but it is very, very important, I think, you know, that you show clearly and actually believe that it’s important to repay that trust, because policy - perhaps all people always say, central banks always say it’s unusually uncertain, it’s unusually challenging, and perhaps I don’t know if now is more or less challenging than other times. But nonetheless it is a challenging period, to be setting policy. And it’s very, very important that we do the best job we can. And, you know, I’m glad to be here doing that. But also, you know, I recognise the importance of recognising that. In terms of, sort of, highs and lows, I know a couple of lows, but let’s start with the RBA itself. Unbelievably impressive place. I’m sure there’s plenty of ex-RBA staff in this room, in fact, I find almost everyone that wrote, you know, notes on the Australian economy has something to do with the RBA so the people are outstanding. Obviously, and I made this point, and I assumed I’ll be asked, you know, what the hell have we got to learn from you, coming from the UK with double digit inflation and, you know, one cries on this shambles, is a word that’s often used about the UK economy and it’s got some truth to it. I think actually what is interesting about coming from the UK to Australia. Australia’s, you know, had the - just an unbelievably strong run of macroeconomic success for so long, that actually, you know, maybe one of the things I could bring is an understanding of what - how to think about, when things don’t always go quite right. UK has unfortunately had a great deal of experience of that. But the raw material at the RBA is outstanding. You know, sometimes we need to make sure that the sum of the parts is bigger than the - whatever the - you know, the individual contributions culturally and so on and so forth. There’s some important work to be done there. And it’s great to be part of that. And in terms of the economy itself, look, I’m a bit of an economic nerd. You can probably tell wading through the last 20 minutes, but I kind of - you know, the opportunity to get to know a new economy and a new region. I mean, you come from a services dominated country off the edge of Europe to an economy fundamentally different in nature and shape. We have a fantastic liaison program or picture of them, of one of our people up there at the beginning. And I’ve been right around the country already and plan to do a great deal more of that. Listening to economy, listening to firms, listening to people in the economy, because you really need to do that to set good monetary policy. I think you can’t just sit there with a bunch of slide rules. It’s been great to get to know people in the financial markets. I want to do more of that next year as well. I’ve had a robust introduction to public life. That’s why he was laughing there, I think, probably. And look, in a sense I come back to my first point, monetary policy matters. Right. It’s a big deal for a society to delegate such an important task to a group of unelected officials, let alone people from overseas. And I think it’s really important to believe - it’s important as a quid pro quo to get out and explain and to use, you know, straight language, to be honest and direct with people, and to value actually the exchange of views, even if they’re provocative and difficult and challenging. I mean, you know, it’s not always going to be polite. People are sometimes going to have strong views. That’s because it matters. And I think, you know, that element of being in public life, maybe it’s a bit of an awakening, but it’s not unexpected. The UK is a pretty robust place as well. So I’ve enjoyed taking the rough with the smooth in that respect. You mentioned the person, I mean, I was here for six months on my own before my wife came out for me because my children was just finishing a school before he went to university. So that’s been exciting on a massive - I mean, Sydney was one of my list of places to live and, you know, it’s one of the great cities, perhaps one of the greatest cities in the world and it’s a privilege of living here is just fantastic. So getting to know the history of it and enjoying everything here has been brilliant. Sorry, that’s quite a serious answer to a light-hearted question. But occasionally - I just want to make this point. I’m in meetings. At the end of it someone will lean across to me and say, it was all great, Andrew, but what are you doing here? And I’ve always wondered why people ask that question because there’s no - my answer would be, why would I not be here? You know, personal, professional development. The opportunity to contribute to the economy here, the opportunity to understand and learn about the place and have a fantastic personal experience. It’s all upside for me and I hope that I can repay that a little bit.

Thank you. Thank you for focusing on humility as well earlier on. And I really liked how you focused on the architecture of this building to enjoy the history. I thought that was really interesting. And then also talking about the impact of trade tariffs.

I’m going to give a bit of a plug, sorry to be nerdy, but the NSW Library has an unbelievable bit on the website, I’m nicking that there, I’m probably in trouble for copyright reasons, but they’ve overlaid all the old maps and photos of Sydney onto a kind of GPS grid. And you can look at any particular bit of Sydney over time by pulling this little lever up and down.

Wow.

Unbelievable amount of data work that must have gone into that, maybe macro bombers involved. There you go. You’ve got your name.

Yeah, I was thinking when you said you needed more work on presentation.

Other data providers are available.

Macro bond is quite good on that front. Before I go to the questions though, what are your plans for Christmas? Have you got any plans for Christmas?

Well, look, I said that my family was on the other side of the world and my wife has joined me now and my son’s coming out for Christmas. So I may be the only bloke on a beach in a wool suit with one of those knotted handkerchiefs on my head. If I am, take pity on me. I’m still learning the cultural norms but looking forward to Christmas here.

Yeah. Fantastic. Okay. Look, there’s a line there. There you go.

Oh my goodness me.

All right. I cannot see who that is.

Some of the scariest minds in economics here.

But if you can announce your name and affiliation, please, and then we’ll go to the left.

I’m James Bond. It’s a true but horrible story. I’m not from MI6. I am from Citibank. You talked a lot about tariffs but what about subsidies? I seem to remember when I was studying economics, subsidies aren’t as bad as tariffs but they’re still pretty bad. We’re paying a lot of subsidies in Australia to manufacturing, are these a good idea and will they have an impact on inflation one way or the other?

If this is about maybe Australia and so forth, I mean, I’m not sure I’ve got a great deal of value added to make on that point. Clearly, there are areas in any economy where you could imagine a world in which either financial markets were unable to assess the risks involved, with a potentially highly innovative technology, that you might well want to say, well look do you know what, there’s a bridge to driving greater innovation and growth. We think there’s a case for getting involved. There obviously can also be cases where promoting comparative advantage makes a great deal of sense. I mean, you know, there’s obviously been a trend over time towards greater national policies of economic support, but I’m not sure I’m going to make specific comments about the Australian approach. That’s a political matter.

Paul.

Thank you. Paul Bloxham, HSBC. Thanks for a great speech. I really enjoyed it. I think -

Half of it was from you actually. I was playing back your - there you go.

Thank you very much.

Is it bonus round now or is it later?

So I really enjoyed that - the way you took the problem and looked at the - and gave us a lot of different views on how it would fit together, and obviously the great uncertainty that’s going to come about if there are tariff announcements. And so I want to game out a very brief story, which is on the 20th of January we get a US President, a new US President. And possibly he will deliver literally what he says he will deliver. And on that day you’ll get potentially large changes in trade policy. So your meeting, the next one is the 17th and 18th of February. And you’ll have a - possibly a very large shift in trade policy that’s happened. But really no hard information about what it means. You won’t have any data points. All you’ll have is your scenario-based, model-based approach to what you do with your sets of forecasts. And you have to focus on those forecasts for setting policy. And I just wonder if it literally is the case that what is delivered is what’s said is going to be delivered, whether that’s going to make you more inclined to do less.

Wow. That’s - I mean, it’s a good question. I mean, one element of your story that I probably want to ask you to fill in, if you still have the microphone. You know, what’s happening to financial markets because - I’m going to filibuster a bit while I think about the rest of the answer there. So it’s been striking, hasn’t it, that financial markets - I think - well, who knows - well, it will be interesting, your view on the hypothesis about what the Mr Market or Ms Market, I should say, a Mr and Ms Market, you know, has actually concluded about this package because on the face of it, it’s a very optimistic story that the markets are telling at the moment about what the next couple of years look like, including for companies that have China right through their supply chain, including for interest rates, including for credit policy, including for equities. So it’s interesting that maybe - I’m going to guess you’re part of those markets, Paul, to be honest. You know, maybe the market knows more than the commentary out about what is likely to come. Maybe there is a huge amount of innovation and growth to be - and if you talk to a lot of - you’ll know if you talk to a lot of companies, they are guardedly optimistic about the next period of time. So, you know, in part, one thing I’m assuming in your story, if you believe - if you buy my story about what financial markets are currently assuming, is there’d be a sharp, repricing in financial markets, is that right, in your scenario?

I love that you’ve swung my question back to me.

Very clever. I didn’t get one out today, Paul.

It’s the first time I’ve had that at one point. And I think you’re right, but I guess the question is, you know, the market has responded in the short run but, you know, we’ve been through this before, where markets can move in certain ways. The markets were pricing the European financial crisis before it, as though it wasn’t going to happen. So the key question is on the event, if you get the event, and you haven’t got - you’ve got a market response clearly, but you haven’t got clarity about what’s going to happen over the medium term, how do you think about your forecasting framework? You’ve set it out. I mean, you’ve set out - what the sorts of things you do, but then how do you factor it in if you don’t know the inflation story? Because you’ve got two-sided risks around it.

So I was at the Bank of England after the Brexit vote, and those of you who are following it will know that the Brexit vote, the outcome was a surprise. It perhaps was not quite a perfect analogy for your description of immediate, immiserating policies, or that you could debate that. And the very first thought, of course, in that situation for a central bank, and let me assume financial markets are in free fall because I think in your scenario, on the assumption they hadn’t been announcing these policy change in advance, they would be. The very first thought is financial stability actually, rather than monetary stability. The first thing to do will be to ensure there’s sufficient liquidity in the markets of everyone that’s involved here, to ensure that it is clear to people that we’re focused on our stability mandate. In the UK, shortly following the Brexit vote, the central bank did ease policy a little bit. I mean, it was already quite easy at the time, but it did ease policy a bit. But what I would say, and what was quite interesting about that is I think people’s assumptions about the balance between supply and demand of Brexit evolve very, very dramatically over that early period. And had we jumped to a premature conclusion about the implications of it before we worked through the economics we would have made a bad policy error. So I think you have to be focused on the instability implications of it straight away. You have to recognise that there’ll be uncertainty, and uncertainty itself, of course, has a substantial negative macroeconomic impact. And then you have to do the best job you can, in terms of understanding its implications for interest rates. That’s only a beta minus answer to your alpha question, but well done, and we’ll take that one away. Thank you.

Thank you, Paul. I might actually go over to James Glynn, because he has been waiting patiently and I’ll come back to you.

Thank you, Andrew. James Glynn from the Wall Street Journal.

Thank you.

Yesterday, the bank gave us a substantially different statement than we’ve been used to for - over the year. I’m wondering can you tell us, does the RBA now have an explicit easing bias? And does the RBA Board have to wait until it sees the whites of the eyes of two and a half percent in the target ban before it will cut?

So I’d dispute slightly that it was a dramatically different statement and here’s why. We, and I’m pretty sure pretty much everyone in this room, have been expecting activity to slow. We have been expecting inflationary pressures more generally to fall back, and indeed that is part of the adjustment process that we needed to see in order to ensure that we were confident, and that was a turn sufficiently confident that inflation will persistently be moving back towards a target. Now, we’ve seen that data progressively over time, and so even if there had been no news in the latest set of data, we would still have around this period been starting to talk about getting more confident in our projection. And I remember, obviously, I remind people in the room that the projection was for trim mean inflation, only to come very gradually back to the midpoint of the target over quite an extended period. So even relatively small uncertainties about the likely outcome of that could cause the, you know, terminal data at which we hit that target to move, you know, to a place where, as I think the minutes have said previously, the committee had a pretty low tolerance for. So, you know, that sensitivity of the projection to date was always quite large, and we were always expecting to get information in that would give us greater or lesser confidence about that, and indeed we’ve been getting that. So I can’t prove to you that we would have written, you know, something similiar to this in the absence of the most recent data, but I would suggest to you that that’s what we would have been doing. Obviously in the most recent period we’ve had the national accounts, and any of you that have crunched through the farm - the farm and the nonfarm split today will see that there is a bit more news actually, in that split - from that split about, you know, probably underlying activity than perhaps we previously thought. We’ve had some weaker wage data at the margin. Rents and house price inflation as well have come in just a little bit weaker, although inflation was overall in target. And so as we - and I can only quote the statement in front of me because I knew someone would be asking this, the Board is gaining some confidence that inflationary pressures are declining in line with those forecast but risks remain. You know, and the biggest risk, of course, and again I’m only saying what the statement says, underlying inflation as it is today remains too high. And so I think - and actually I think, you know, in some sense, and again people in the room so I’m only telling you what you know, the fact that this was - as I think Michele said yesterday, an evolution of our position. You saw that in the way the markets reacted as well. I think, you know, February we went from what, 50/50 to two thirds, one third or something. I’d call that an evolutionary adjustment. There’s a lot of data left to come through the pipe between now and February, and those data need to continue to come in, in line with our forecast, before the time we get to the February meeting. So, look, I don’t think it was - it wasn’t intended to be, and I think Michele underscored very clearly at the press conference that this was a deliberate set of decisions and communication decisions made by the Board, building on what we probably would have expected to be saying anyway, and recognising that the margin, some of the data have been a bit weaker.

And just in terms of the whites of the eyes?

Say again.

Do you have to get close to two and a half before you start cutting? Or is there scope to do it significantly earlier than that?

Well, remember that what we were trying to do was target the outlook for inflation and our forecast, and I think most of the people in the room, is for inflation only to come very gradually back to target. And it’s that very gradual path that I think is part of the challenge with setting policy. You’re not targeting inflation today, you’re targeting inflation a couple of years out. And that’s, you know, to use a phrase, bloody difficult. And so you’re forming views about that outlook the whole time. Is there a trigger level for the current level of inflation that would give us confidence that that outlook for inflation, you know, is sufficiently strong to move policy? No, I don’t think there is a single trigger figure because we’re trying to form a view about the whole economy, inflationary pressures as a whole, actual inflation as part of that story but it’s only part of that story.

Thank you. And Merry Christmas too.

Thank you.

Over to Ben.

Ben Jarman from JP Morgan. Thank you very much for your speech. The general thrust seems to be that, you know, all the details will matter with respect to trade policy. You know, you’ve got growth outcomes, inflation outcomes, what happens with exchange rates. So in that context when you’re facing potential tariff shocks and trade shocks, is there an even stronger argument for monetary policy and fiscal policy to be, kind of, closely coordinated domestically here in Australia?

So years ago, I think I said this to John Kehoe actually. Mark Carney, the other foreigner in my life said to me, but it was sometime ago said, how’s it staying in your lane? That was how we talked. No first names around there. And I do think it’s quite important actually. It goes back to the point I made in answer to your question, the central bankers have been given an enormous responsibility. You know, not elected by the public - can’t be elected out by the public. We’re given a mandate to deliver. And woe betide a central banker that starts to decide that he or she has, you know, nailed that. And, you know, has been mandated, which they have not been, to do policy other than the policy they’ve been asked to do. And I am quite often struck when people occasionally say, it wouldn’t be good if you were getting fiscal policy or something. I think, do you really think that? Do you really think that, you know, if we were to, you know, be given completely free hand, technocratic hand to set policy, fiscal policy, whatever we wanted it to be, that that would be a sensible structure? And I am personally, you know, doubtful of that. Now, an implication of that is that fiscal policy and monetary policy will be made in knowledge of each other but separately. And that’s the model we have. I am a believer in it, actually I’m sure that you can write models down where, you know, some platonic philosopher king, who had only the best interests of the future generations of society, set perfect settings of monetary and perfect settings of financial fiscal policy. And I don’t need to tell you that’s not the world we actually live in. And I think it’s probably important that when it comes to setting fiscal policy, which is about winners and losers, distributional outcomes, that the people that set that policy are subject to, you know, public scrutiny. And I think a consequence of that is, is that we speak a lot, we communicate a lot, we have the Treasury Secretary on our Board, and obviously, you know, people speak - the Treasury and the RBA speak a great deal. But in the end of the day the people responsible for those two sets of policies are separate. And I’m not sure the allegedly bad outcomes from that model are quite as bad as people sometimes say. But maybe I’m wrong about that.

Thank you.

Tapas.

Thank you. Tapas Strickland from the National Australia Bank. I wanted to bring us back to the Ghost of Christmas present.

You’re not going to be asking about your survey, are you? Other business surveys are also available.

My Google Gemini AI chatbot helped me recall what Christmas carol The Ghost of Christmas present does. And the Ghost of Christmas present also reveals the symbolic figures of ignorance and want. And I was just wondering, yesterday the RBA Board Statement mentioned how they would becoming incrementally more confident on inflation data by incoming consumption from the GDP figures. But less clear from the statement was whether they were becoming more confident on the potential of productivity to hamper or not hamper the sustained return of inflation to target, specifically firms and workers didn’t realise they were going into a lower productivity environment. So I was just wondering whether you could give us a little bit more updated thoughts on feelings about productivity and how that’s feeling into the confidence of inflation returning to target?

Well, I mean, as Michele often says, we’re not productivity experts. We have a commission for that. As you know, the RBA projection, I suspect yours too, assumes some pick up in productivity over the forecast period and that’s important as part of the story of bringing James’ question earlier, bringing inflation back to target. And if that pick up doesn’t occur then other things in the economy would have to adjust, which might include inflation or might include wages or something else. And we’d have to keep a close eye on that. So I’m not - I was trying to track back to the beginning of, you had a lot of thoughts in a ChatGPT and the Ghost of - I did catch some of the other points but it’s a bit hard to hear from the back here. But what was your question about productivity exactly?

My question was: Is the RBA becoming more confident? Because in the RBA Board Statement it was, we’re becoming more confident about the trajectory for inflation, but that was more based on Q3 consumption and wages.

Yeah. I mean -

Nothing on productivity.

Sorry. Can I reframe your question?

Sure.

Is in our overarching point that we’re becoming more confident about inflationary pressures, does that include becoming more confident that productivity is going to rebound?

Either productivity rebounding or more confident that firms and households are making adjustment to the potential for productivity not lifting.

I don’t think a change in our view about confidence or otherwise on productivity was a key part of our decision in the month. No. I mean, perhaps you’d be a bit surprised if it was because, you know, productivity data only come around every now and then. It’s interesting. Our Board, as you know, is a slightly broader Board than the Board I’m used to in the UK and we have quite a few business people around the table. And they - actually interestingly when we present the latest set of productivity numbers to them, they very often sort of screw their face up and say they don’t recognise them. Now, obviously there’s a composition point, but they point out that in many of the companies they’re involved with there’s a great deal of investment going on in new technology and in ways of using labour more efficiently and so on and so forth. And I think that’s quite a common theme actually when we go around in our liaison meetings, that there definitely is investment going on to improve productivity. After all, there’s so many new workers in Australia. You know, there must surely be capital provided for these extra workers to work with and over time that should become a more positive story. The data, you know, I mean, they’re pretty - they have been pretty bleak, right, and it’s not just true in Australia. It’s true in my own country of the UK and everywhere practically, except the US. And so looking backwards the out turns have been quite concerning. What we hear on the ground is that it remains more likely than not that the type of pick up we’re expecting, it needs to come. But if it doesn’t come, something else in the economy will have to adjust to bring inflation back to target.

Yeah. Thank you.

Andrew, how you going? Because I was going to go to Jo.

It’s all right.

And then we’ll finish with the right, or is that too much?

Yeah, no, it’s all right.

That’s fine. Well, we’ll take the question from Jo.

She’s always going to ask me a hard question so maybe we should -

And it was really good to see Jo on Q&A recently.

Yeah. You know what, excellent. Let’s give her a round of applause. At least half the room clapped, Jo, so there you go.

I’m just trying to add a bit of diversity to the people asking questions.

I know.

So I would encourage the females in the room to stand up. Thanks for your great speech. I wanted to circle back actually on the shock that could be coming from China. And, as you said, we don’t know what the detail of the tariff policy looks like yet but we’re incredibly exposed. And you made the point, clearly correctly, that when we look historically Australia as a low cost producer of iron ore in particular, but actually broadly of commodities, we tend to be able to shift whatever we can dig out of the ground. So the volume impact is generally quite limited. And we saw that with the coal ban in China a few years ago. As economists we often think about GDP expenditure, like GDPE, right, but in a small open economy, very commodity based, the income side is really important. And whilst we might be able to ship lots of volume, we often take a hit through commodity prices and the terms of trade. And the starting point of that potential shock coming from China is one where a broad-based private sector income recession in Australia, mining profits are contracting annually, nonmining profits are contracting, household disposable income was disappointing and the terms of trade are falling. So are you more worried about the income side and how are you thinking about that as you factor in the scenarios that you talked about?

I think it’s a good point. To be honest I think you’ve answered your own question. You’re obviously a pro. It’s interesting. The iron ore price has behaved interestingly, hasn’t it? Maybe if you get pulled back up and tell us how your forecast is doing. Do you have to put actual money on your forecast or just write them down? I don’t know. But, I mean, the iron ore price has not fallen as much as, you know, some of the more doom laden scenarios might have suggested. Is that, again, part of this broader optimistic story of financial markets and it’s all going to go south, or is it telling you something that people know? It’s interesting, right, looking at the market for steel, as I had to talk about things I had to learn about, and how that market is evolving. It’s clearly, you know, the use of steel in construction and home building and so forth in China. You know, peaked some time ago, right. I don’t need to tell you this. I’m probably telling you about what I’ve read in your own pieces. But the diversification in the use of steel and the innovation in use of steel is an interesting story and it’s actually gathering a pace. And my understanding is that some of the forecasts for the, sort of, peak steel or whatever and this sharp fallback in the outlook for steel production have been somewhat falsified on the upside. So we have to be, you know, probably humble about the way we forecast that. Look, I can’t say very much more than the fact that the kind of scenario you describe is clearly a downside risk. It clearly is. And I think one of the interesting things about that BIS chart, one of the reasons why I showed it is, clearly there is a degree of concentration risk in what you might call Australia’s current business model. And, you know, it’s been enormously successful. And, you know, a bit like you might - they say in Apple, why are you focusing on the iPhone? I mean, you know, well, wouldn’t you too, if you had such a successful product. But there are challenges there, in terms of differentiation of diversification in the years ahead. I’m not sure I’ve really answered your good question, Jo, but let me reflect on that. Thanks.

Thanks for your comments. Appreciate it.

Thank you.

Thanks. We’ll finish with the media questions. Because I have stretched the envelope a lot already, if we could just make the questions quite specific, please. Yeah. So we’ll go over to the first one.

Yeah. Sophia Rodrigues from Central Bank Intel. At a recent Q&A - you can hear me?

Yes. It’s a bit echoey here. Maybe it’s just me but anyway, you keep going, Sophia, and I’ll -

Okay. At a recent Q&A event, Governor, I think leaked out a little secret and I don’t think people in the - everyone in the room heard that. You are a glass half empty person. So I’m very interested to know the insights. What is a glass half empty person thinking, especially because Bullock said that she believes that there are better times ahead. So do you think there are not so better times ahead And if you could describe that.

Yeah. All right. Let me take the other two questions then I can pick and choose which one I answer so.

Yeah, perfect.

Peter Hannam from the Guardian.

Hey Pete.

And I was wondering whether - if Dickens had named any central banker, he might have had a name like Hauser or Wauser. Anyway, that’s not my question.

Yeah, that’s true. He didn’t like debt though, did he? He was very, very -

No, that’s right.

Not keen on bankers. Anyone in the room.

Yeah. So, look, my question is coming from the banking with a specialist monetary policy board. If one had been in place in this past year, do you think there would have been a different stance? For instance, you know, we’ve had a year with no interest rate change. Would a monetary policy board, say it lifted, be more active, such as in New Zealand and cut and - instead of stasis?

Got it.

Thank you.

Last but not least.

Okay. So my question has two parts, Deputy Governor. So, firstly -

Succinct.

I’ll be succinct, I promise.

You guys don’t understand the game theory of this. If you offer two questions, we’re going to go for the easy one, right. You should - you should -

Don’t worry. They’re fairly related but I’ll give it a shot. So, firstly, in your speech you mentioned the impact of the upcoming - well, like the trade wars on the Australian economy is ambiguous. So how worried are you about this uncertainty and ambiguity? And, you know, with that in mind it seems, you know, the current Reserve Bank forecast for steadily falling inflation over the next year or two, doesn’t factor in these upcoming US tariffs and countries retaliating. So is there a chance these forecasts might be a little bit too optimistic as they stand?

Okay. All right. Very briefly, and I don’t know - yes. So it’s true that Michele has a cup that I think Phil gave her which is glass half full. And I thought it would be rather amusing, although she didn’t think it was as amusing as I did, to get a cup made which said glass half empty. The two go together in theory, as you say, so it’s a perfect match. It’s funny, central bankers are trained to worry about the left hand tail. Right. They’re trained to worry about the bad outcomes. And sometimes we do actually have to remind ourselves that monetary policy, unlike financial stability is about hitting the midpoint. It’s about making sure we get the balance right. And so if your question is, you know - you’re surely not asking me, what are some of the downside worries in the current economy? I mean, I could go on and list them all night. But there are, you know, countervailing upside risks as well. And, you know, we have very lively discussions, not just me and her, but the whole Board about that balance, about that balance of risk. Interesting question, what would the Bank of England MPC have done in the circumstances? My guess is much the same, actually. Years ago, when Mervyn King, I think he said to me, look, you know, the system has got so many checks and balances in it you could probably run it with a set of dogs or something and it would still on average come out with the right answer. I’m not sure - that was a cyclical low point of his confidence in the committee or something. All committees have strengths and weaknesses. One of the challenges with the Bank of England, one is obviously there’s independent named accountability. And, you know, so everyone feels they need to get out. The world must know my view, and sometimes maybe the answers, although the world doesn’t need to know your view, it needs to know what the committee as a whole is thinking. There’s a lot of - because you have a lot of economists in the room, as you all know, you get a lot of technical debates, sometimes which slightly miss the big picture. And so my suspicion is that, do you know what and having sat on the - not as a member of but listened into the motion policy committee discussion in the Bank of England for many years, that it wouldn’t have been actually that different. One of the strengths of the Board here is it does bring in people with judgment and knowledge. And to the question about uncertainty, your question actually I haven’t answered yet. You know, actually what’s interesting is the motion policy decision is only about one variable. When you have - see policy, you know, business people, they have 28 decisions to make every meeting. We only have one. And so in some limited sense actually, our decision-making is a bit easier. In other ways it’s a bit more difficult. I think it’s a great question actually about is it possible? Let me reframe it slightly, is it possible that the biggest risk from all of this tariff stuff is not whether it’s good or bad but that nobody knows. And the uncertainty impedes investment and it challenges our decisions about household budgeting and job security and all those things. And it’s certainly true that one of the biggest risk actions, one of the comments we got on the speech that I didn’t probably take on probably when we were doing it in draft, is have you underplayed the fact that what if nobody knows, from day to day, from week to week, for months and months, what’s going to happen? I think that’s quite a profound point and one that we will have to think about. I’m going to stop there.

Thank you so much for your generosity. When you said to me, you know, I’m happy to do longer on Q&A, you definitely have been incredibly generous. No, we’ve loved it. So big round of applause for Andrew, and thank you so much.