that they have all been adjusted downwards, which is consistent with the change in confidence i described above ( table 1 ). table 1 : forecasts for major economies year - on - year growth rates 2001 2002 made in made in made in made in june 02 oct 02 june 02 oct 02 us 0. 3 2. 7 2. 4 3. 6 3. 0 japan - 0. 3 - 0. 5 - 0. 9 1. 1 0. 9 europe 1. 5 1. 3 0. 8 2. 7 1. 9 g7 1. 8 1. 4 2. 9 2. 3 0. 6 also, forecast output growth in each year is below potential, implying a widening of the gap between actual and potential output, and hence disinflationary pressure. but on the other hand, the downward revisions are not large, so they are not predicting a future recession. in fact, the sequence of three years shows a pick - up in activity from 0. 6 per cent in 2001 to 1. 4 per cent in 2002 to 2. 3 per cent in 2003. if this outcome were to occur, the recovery would be slightly better than that from the early 1990s recession and the whole episode much better than those in the early 1980s and mid 1970s. furthermore, when we add in the non - g7 countries, particularly the major developing ones such as china and india, projected growth rates for the world economy are appreciably higher. the imf ’ s forecast for world growth in 2003 is 3. 7 per cent. i think these numbers are a reasonable working assumption on which to begin our consideration of policy. in this case, although the next eighteen months or so will not be great, they could hardly be called disastrous. but we also have to keep in mind the risks to this scenario, and here, i think there now seems to be widespread agreement that they are mainly on the downside. that is, if an outcome very different to the consensus was to occur, it would be more likely to be a weaker one than a stronger one. that, at least, is what the financial markets are saying if i interpret them correctly. since mid - year, us share prices have fallen by about 15 per cent, bringing the cumulative fall since the 2000 peak to over 40 per cent. in europe, the falls in both periods have been larger. of perhaps more interest is the fact that bond yields in the united states have fallen by over 100 basis points since

philip lowe : panel remarks – conference on “ central bank independence, mandates and policies ” panel remarks by mr philip lowe, governor of the reserve bank of australia, at the conference on central bank independence, mandates and policies, organized by the university of chile, webinar, 22 october 2021. * * * thank you for your invitation to participate in this conference. you are addressing important issues and i appreciate the opportunity to share australia ’ s experience with you. at the outset, i want to acknowledge that there is no single right answer to the issues that are being discussed in this session : central bank mandates, the appropriate policy tools and coordination arrangements with the government. ultimately, what matters are results. the evidence shows that the probability of a country achieving good results is enhanced by getting the structure right. this structure includes : the legal mandate of the central bank ; the mechanisms for accountability ; the way the political system works ; and the process for appointing individuals to the central bank. the most effective combination of these elements will vary from country to country. in australia ’ s case, the key elements of the central bank mandate were passed into law in 1959 and have remained unchanged since. the 1959 legislation set out three objectives for the rba ’ s monetary policy : 1 1. the stability of the currency ( widely interpreted as low and stable inflation ) 2. full employment 3. the economic welfare and prosperity of the australian people. under this legislation, we have had many different monetary policy regimes : a fixed exchange rate against the us dollar ; a fixed exchange rate against the trade - weighted index ( tw i ) ; an adjustable peg against the tw i ; monetary targeting ; and, since the early 1990s, flexible inflation targeting. this experience illustrates that legislation is only part of the story, with our broad legislation accommodating a wide variety of monetary policy regimes. in australia, the choice of exchange rate regime is one that is made by the government. in my view, this is as it should be, as this choice has wide - ranging implications for how a country ’ s economic system works. in our case, the decision by the government to float the australian dollar in 1983 helped reshape the economy in a positive fashion. the floating exchange rate has also proven to be a great stabiliser of the economy, particularly in the face of large swings in australia ’ s terms of trade caused by movements in commodity prices. while the australian government determines the exchange rate regime, it is the rb