michele bullock : opening statement - house of representatives standing committee on economics opening statement by ms michele bullock, governor of the reserve bank of australia, to the house of representatives standing committee on economics, canberra, 16 august 2024. * * * 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. so how are we doing? since our previous appearance before this committee, there has been further progress on inflation, but it has been very slow. inflation peaked at 7. 8 per cent in the december quarter 2022. it came down to 4. 1 per cent at the end of 2023 but since then has only declined a further 0. 3 percentage points to 3. 8 per cent in the june quarter 2024. underlying inflation, which abstracts from volatile components of the index, is also still elevated at 3. 9 per cent in june 2024. this remains too high. our current forecasts have underlying inflation by the end of this

business models. many stakeholders would like to see progress on a range of issues, including the high cost of card payments for small businesses, surcharging of consumers and competition issues related to mobile wallets. the timely passage of the psra reforms will allow us to consider these issues in the broader context of the rba's expanded regulatory arrangements. the payments system board discussed these issues at its quarterly meeting yesterday. it also discussed a number of other issues that are important for the future of the payments system in australia. this included a paper that has been written jointly with the australian treasury, providing a stocktake and roadmap on domestic research priorities relating to the concept of central bank digital currency. the paper will be published in september. the board also discussed developments in least - cost routing, challenges in wholesale cash distribution and opportunities relating to improved access and functionality for the new payments platform. banknote distribution another issue i would like to update the committee on is recent developments in the cash distribution system. while the use of cash for everyday payments has declined in recent decades, it remains an important means of payment for many australians. cash is used as a store of wealth, particularly during periods of economic uncertainty, and can be a useful backup for electronic methods of payment. as you know, the cash distribution system came under considerable stress earlier in the year when the financial viability of the largest firm providing cash - in - transit services, linfox armaguard, came under question. since then, the rba, the australian treasury and key participants in the cash distribution industry have been working together to strengthen business continuity arrangements, increasing the ability of the industry to respond to a significant disruption to the supply of cash. in late june, an industry support package of approximately $ 50 million over 12 months was agreed between linfox armaguard and its major banking and retail customers, reducing the near - term risk of a major disruption. the funding deal should provide time for the industry participants, the rba and government to focus on formulating a longer term model for cash distribution, so that cash is available for those who need and want to use it. developing a more durable future cash distribution system will require broad consultation and require participants in the system to approach these issues in the public interest. thank you for listening. my colleagues and i look forward to answering your questions. 4 / 4 bis - central bankers'speeches