Phil Lowe also gave a good speech recently. I laughed when I read this paragraph, which once again reiterates the Bank's focus on keeping downward pressure on inflation expectations:
"Not unexpectedly, this decline in the relative price of manufactured goods has caught the attention of the household sector. In consumer surveys, the number of people that say now is a good time to buy major household items is around its highest level in more than two decades (Graph 3). But interestingly, households do not appear to have responded particularly strongly to this fall in both the absolute and the relative price of manufactured goods, with retail spending having been quite subdued recently. Many households have preferred to use the growth in their incomes to increase their savings rather than to buy more manufactured goods at lower prices. As the Bank has discussed on a number of occasions recently, whether or not this continues will have a significant bearing on how the economy evolves over the next year or so."
And then there was also this:
"The most important contribution the Reserve Bank can make to this task is to keep inflation low and stable, so that firms can respond to the shift in relative prices without their decisions being distorted by concerns about inflation in the general level of prices. The inflation targeting regime that we have had for nearly two decades provides the right framework to do this."
