This book has charted the changing role and clout of the RBA. The Bank emerged from its post-war condition of relative obscurity in the early 1980s when deregulation had wiped the monetary policy slate almost clean, leaving only the manipulation of short-term interest rates, an instrument controlled by the Bank. This form of monetary control would become the key ‘swing’ instrument of macroeconomic policy and a major weapon against inflation. The RBA and monetary policy moved to centre stage.

The RBA, and monetary policy, focused on achieving and sustaining low inflation after the early 1990s recession. By the mid-1990s the Bank had achieved low inflation and an unprecedented level of credibility – the stuff of orthodox central banking.

However, the Bank resisted the ultra-orthodox New Zealand model and persisted with its more flexible approach. It presided over low inflation and began to chart a new policy orthodoxy by achieving comparatively strong growth performance. This can be seen either as a new 1990s approach to monetary policy and central banking practice or, in the Australian context, as a partial return to the views of the 1980s, which also emphasised growth. Of course, despite strong growth performance, unemployment (properly measured) and labour market insecurity still remain major problems, one facet of the new political economy of low inflation. Politicians have come to realise that low inflation is electorally popular, not least because debt-exposed voters do not want the central bank to raise interest rates in the face of an upsurge in inflation.