a limited effect on inflation and also on output and unemployment. this has been the case because of the high credibility of the ecb in safeguarding price stability. because of this high credibility, inflation expectations are now well - anchored. since the public has remained convinced that inflation will remain low in the long run, the energy price increases have not generated significant second - round effects on wages and prices. as a result, monetary policy has been able to maintain a more accommodative stance. this stance has been decisive in counteracting the negative effects of the oil price increases on the real economy. price stability is the goal of monetary policies around the globe today, the insight that price stability is the primary goal for monetary policy has also been translated into the mandates of central banks of advanced economies and also of a very large number of emerging economies. for instance, it is the case in the uk, it is the case in japan, it is the case in canada, in australia and new zealand. price stability is the goal of modern monetary policy around the world. this also holds true for the us fed. the mandate of the fed is sometimes contrasted with that of the ecb, because it comprises not only a goal of price stability but also the goals of maximum employment and moderate long - term interest rates. although the fed ’ s mandate does not establish a hierarchy among these goals, the fed has made clear on a number of occasions that it considers price stability as a necessary condition for and the best contribution of monetary policy to achieving the highest level of welfare and sustainable economic growth. the track record of the fed in controlling inflation over the past decades speaks for itself. the successive chairmen of the fed have made clear that the fed considers price stability not only as a goal but also as a means for the fed policy to achieve its other statutory goals. this is very much in line with our own framework and thinking. conclusion to sum up, it is an error to think that a choice needs to be made between price stability on the one hand, and sustainable economic growth and welfare on the other. price stability is both a precondition for and a means to enhance durable economic growth and welfare. that being said, we should all be aware that, if price stability is a necessary condition, it is not a sufficient condition per se for sustainable economic growth and job creation. as i have pointed out before, the growth potential of the euro area economy is ultimately determined by its structural features. that is

global investment and higher living standards. we can ’ t be sure though : time will tell. but a clear lesson from history is that advances in technology form the backbone upon which higher living standards are built. an obvious question is how to create and seize these opportunities that technology offers. there will be those in the audience better informed than me on how to do this. i do, though, find it hard to escape the conclusion that the starting point must be heavy investment in human capital and the creation of a culture that promotes innovation. a related challenge is dealing with the distributional effects of technological progress. the sheer scale of global markets means that the potential gains to innovators who can tap into these markets can be huge. at the same time, new technologies and globalisation create some losers. at the moment, our societies are struggling in dealing with this tension. we have a strong interest in working out how to manage this better. if we don ’ t do this, 1 / 2 bis central bankers'speeches technological progress and globalisation could come to be seen as bad things, not the good things they are. that would surely harm prospects for long - run global growth. 3. in australia, it is likely that growth over the next couple of years will be a bit stronger than it has been recently. the pick - up in the global economy is helping us. the return of mining investment to more normal levels is almost complete. monetary policy continues to provide support and surveybased measures of business conditions have improved noticeably. employment growth has also strengthened over recent months. these are all positive developments. we do, though, continue to face some headwinds. households are gradually coming to grips with slower growth in their real incomes. growth in wages is unusually low, average hours worked have declined and the nature of employment is changing. so there is a recalibration of expectations going on. many households are also coming to grips with higher debt levels and, in our largest cities, high housing prices. we need to watch these issues carefully. 4. australia ’ s longer - term prospects remain positive, but we need to keep working to keep them that way. over the past couple of weeks there has been much discussion of australia ’ s record run of 26 years without a technical recession. this is a significant achievement. we have done better than most countries over a long period. but just in case we are inclined to celebrate too much, we should remember that over those 26 years we have