philip lowe : remarks at a reserve bank board dinner with members of the sydney community speech by mr philip lowe, deputy governor of the reserve bank of australia, at a dinner with members of the sydney community, sydney, 6 september 2016. * * * good evening. on behalf of the reserve bank board, i would like to warmly welcome you all to this dinner. these dinners, which we hold in all the state capitals, have become one the highlights of our calendar. they provide a fantastic opportunity for us to talk with leaders from the worlds of business, politics, academia and the community sector. so thank you all for taking the time to join us this evening. this particular dinner marks a very special occasion. earlier today, glenn stevens chaired his final – and 110th – meeting of the reserve bank board. as you probably know, glenn has been the governor of the rba for 10 years. before that he was the deputy governor for five years. and before that he was the chief economic advisor to the board for more than five years. all up, he has attended 215 meetings of the board over some 20 years. glenn has also attended and chaired 41 meetings of the payments system board. i am delighted that many of the current and former members of both boards who have served under glenn are here this evening. given the sheer scale of glenn ’ s contribution, it is appropriate to begin this dinner by delivering – on behalf of us all – a few words of tribute to him. after that, and after we have had our entree, the treasurer, the hon. scott morrison mp will speak and then glenn will say a few words. that will bring the formalities to a close and then we will enjoy the rest of the meal and conversation. many of you may know glenn personally. those of you who don ’ t know him might feel like you do : there are few australians whose public utterances are so closely scrutinised and so widely covered by our media. but whether you know him personally, or through the media, i am sure you will have formed the same impression of glenn. that is of an incredibly dedicated servant of the public over a career that spans 36 years, and a man of the highest integrity. glenn has relentlessly served the interests of the australian people. he has brought a very high level of analytical rigour to the task. he has exercised an independence of thought that is not always seen in public life. he has patiently explained difficult economic issues to australians

prices both due to relatively moderate demand, and due to increased supply. against this background, the major central banks continued, and some of them further enhanced, their very accommodative monetary policy. from the standpoint of the israeli economy, which is a net importer of commodities and energy, the changes in commodity prices were reflected in improved terms of trade, which led to a significant increase in the current account surplus. the increase in the current account contributed to appreciation pressure on the real exchange rate, which for its part weakened the competitive ability of the israeli economy and contributed to the slowdown of growth in exports and of growth in general. with the decline of “ surplus growth ”, or the growth gap between israel and its main trading partners, the pressure for continued real appreciation weakened. throughout this process, the composition of growth changed, with the contribution of surplus exports declining while the contribution of private consumption to economic activity increased. bis central bankers ’ speeches these developments took place while inflation was very low, affected by global commodity and fuel prices and by government - initiated price decreases, and to a certain extent by the appreciation of the shekel. monetary policy has operated against this background. the monetary committee adopted a very accommodative monetary policy this year as well, leaving the interest rate at an historic low of 0. 1 percent, and announced that in its assessment the interest rate will remain low for a considerable time. in addition, the bank of israel continued to purchase foreign exchange as part of two programs it is running – the program intended to offset the effects of natural gas production on the current account, and the program to moderate fluctuations that are not consistent with the basic economic forces. in view of the fact that the effective exchange rate is appreciated relative to equilibrium according to various estimates, it continues to pose difficulties for export growth and for the tradable sector. exchange rate policy operated in the past and will continue to operate with determination in the future in order to assist growth in exports. the monetary committee ’ s announcement of its assessment that monetary policy would remain accommodative for a considerable time, which means that the committee ’ s assessment is that it would not raise the interest rate immediately after the interest rate increase in the us, which is what actually happened when the interest rate in the us was raised in december, also serves as a counterforce to the forces for appreciation. the cpi figure for april and the disappointing growth figures for the first quarter that were published this week