glenn stevens : economic update speech by mr glenn stevens, governor of the reserve bank of australia, at the econometric society australasian meeting and the australian conference of economists, hobart, 3 july 2014. * * * i thank alexandra rush for assistance in compiling these remarks and selwyn cornish for comments on the historical material. thank you for the invitation to visit hobart – in winter! – and to take part in this conference. economics in tasmania this year marks a century of economics at the university of tasmania, dating from the time herbert heaton took up duties as a lecturer in history and economics in 1914. heaton ’ s pacifist and somewhat left - leaning views apparently caused some controversy, both in tasmania and subsequently at the university of adelaide. he left australia in 1925 for canada, and later had a successful academic career at the university of minnesota. 1 over the ensuing period, some of the greatest names in australian economics studied here, taught here or otherwise carried out some part of their professional duties here. it ’ s quite a line - up. there was lf giblin, born in tasmania, sportsman, student at cambridge, some - time acquaintance of the bloomsbury set, yukon adventurer, enlisted soldier in middle age and wounded three times in the first world war, tasmanian government statistician, adviser to government on economic policy in the 1930s depression and board member of the commonwealth bank. then there were those called “ giblin ’ s platoon ” in the very nice book of that name by william coleman, selwyn cornish and alf hagger : 2 • sir douglas copland, lecturer at university of tasmania, the first dean of the university of tasmania faculty of commerce, professor at the university of melbourne, adviser, contributor to depression era policies, inaugural alfred marshall lecturer at cambridge, diplomat and founding vice chancellor of the australian national university. he was succeeded at the university of tasmania by james bristock brigden. • brigden, like giblin a soldier, also wounded, post - war lecturer in economics here at the university of tasmania, director of the queensland bureau of economics and statistics, secretary of a number of government departments during wwii, influential in the development of tariff and wage policies, and diplomat in washington. • sir roland wilson, born in tasmania, completed a bachelor of commerce at the university of tasmania ( taught by brigden and copland ), where he later lectured in economics. he was later commonwealth statistician, turning down a chair

by thinking that, if the bank is not thinking about easing, then it must be thinking about tightening. but we were not contemplating tightening. in fact, the conclusion we had reached was that we might be on the brink of sitting still for some time. that is why we adopted language about “ stability ” in interest rates, the intended effect of which was to be clear to people that we did not think that higher interest rates were imminent. that has not stopped people from opining about the timing of possible future increases – or, indeed, decreases. that ’ s what makes a market – people have differing views, for various reasons. overall, i judge that language to have served its intended purpose. present market pricing suggests that market participants expect interest rates to remain low for some time yet. if anything, pricing in recent days has suggested that, if a move were to occur over the next several months, markets expect it would be down, not up. any increase in rates is thought by market participants, on average, to be unlikely for quite some time. the evolution of language should be expected to continue, as more time passes and further information comes to hand. long before any thought were to be given to an increase in rates, it would probably be sensible for the board to cease references to a future “ period of stability ” and revert to the more normal formulation that the stable policy settings “ remained appropriate ” or something like that. such an evolution would amount to no more than a recognition that a “ period of stability ” had in fact already been occurring and wasn ’ t entirely in the future, but wouldn ’ t imply any particular change in the bank ’ s views about the future course of policy. it should go without saying that those seeking to understand our thinking should, in any event, look not just at the wording in the post - board statement, nor just that in the minutes, but also at the whole analysis of the economy and the outlook in the regular statement on monetary policy. bis central bankers ’ speeches the exchange rate another issue in communication has been how to describe the exchange rate. for a period we described it as “ uncomfortably high ”. it subsequently declined, though we suspect that was due more to a change in mood in global capital markets than to our words per se. we altered our language to reflect that decline, and then adjusted it again as the currency re - traced some of that rise. there seems to have been a very strong focus on whether the adjective “