There is a bombshell footnote to the valedictory speech delivered in Sydney this week by RBA governor Glenn Stevens, who steps down next month.
Here it is (it’s the very last footnote here – my emphasis added):
I can recall being asked by an IMF official during the mid 1990s whether, if inflation rose above the target, we were prepared to create a recession to get it down again. The implication was that we should be. We insisted on not being obliged to have a recession to shave a few tenths of a percentage point off inflation in a short period. We were not believers in the idea of destroying the world to save it.
Central bankers, as we all know, choose their words carefully.
Interesting that it is the very last footnote, in Stevens’ last major speech.