despite the political uncertainty present at that time. monetary policy remained accommodative, amid moderate inflation of 1. 5 % in the first four months of 2018, strong external position and gradual stabilization of market expectation. in march 2018, the main policy rate was reduced to 3 %, which is historically lowest level. deposit and credit growth of the banking sector continued, with revival in the lending to the corporate sector, accompanied with a decline of the npl ratio in the first quarter of 2018 to 5. 1 %, due to claims collection. current account deficit in 2017 additionally reduced to 1. 3 % of gdp, reflecting the positive contribution of the foreign capital companies on the export side, which indicates further strengthening of the economic fundamentals. regarding the recommendation from the last year ’ s dialogue, the central bank prepared draft strategies for npls management and strengthening the use of local currency, both agreed 1 / 2 bis central bankers'speeches with the ministry of finance and currently subject to consultation with other relevant stakeholders. in both areas, as already being confirmed in the assessments and final conclusions, we have already achieved tangible results ; however the adoption of these comprehensive strategies will put in place additional mechanisms to deal with these issues. in light of the challenging time that we have faced in recent years, we need to point to the maintenance of price and financial stability as important pillars of the macroeconomic stability, as well as the need to continue strengthening the fundamentals and resilience of the economy. implementation of structural reforms and strengthening institutional capacities, including sound public finances, should remain main priorities for faster income convergence and eu integration. thank you! 2 / 2 bis central bankers'speeches

my main topic today which is the institute ’ s contribution to macroeconomics. i will focus on three main areas of contribution by the institute to the greater good of australian macroeconomics. the first is indeed leading indicators and business cycle analysis. the second is modelling and forecasting. the third is surveys. leading indicators and business cycle analysis for many years, the institute has been associated with its series on leading indicators, a summary statistic that aims to predict economic activity. i am not a particularly big fan of leading indicators as a general rule. personally, i prefer to look at and think about all the components of a leading indicator individually, rather than attempt to summarise the information in one index, particularly given that what matters most at different points in the economic cycle varies through time. ( the nils leading indicator of employment at the melbourne institute that i was just talking about probably does a better job of forecasting than the gdp leading indicator. ) that said, if one were going to use one leading indicator series in australia, then it would be the melbourne institute ’ s. as an aside, i was intrigued to learn from reading ross williams ’ book that the institute was the first body in australia to publish seasonally adjusted and trend data, some time before the abs began to do so. bis central bankers ’ speeches through the work of ern boehm, don harding and adrian pagan, the institute has also made a significant contribution to business cycle analysis. those three gentlemen have generated a number of great papers on the topic of measuring and dating business cycles. they have produced the definitive body of work for the australian economy. out of that research has come the most cited dating of australian business cycles. modelling and forecasting the melbourne institute has been synonymous with modelling, particularly during the reign of peter dixon. the modelling by peter dixon, as well as that done by peter brain was, of course, more of the cge world than the macroeconomic world. now a critical question is whether those two worlds overlap. i am told by those who can still remember, that a fair bit of time was spent trying to marry the short - term macro forecasting models at the treasury and the rba with the cge model of the institute. many conferences were held on the issue. i am not sure the question was ever really answered. but besides the modelling side of things, the institute regularly publish an assessment of the australian economy in the australian economic review, as well as discuss the outlook for