Guy Debelle: Uncertainty

Text of the 7th Warren Hogan Memorial Lecture by Mr Guy Debelle, Deputy Governor of the Reserve Bank of Australia, Sydney, 26 October 2017.

Central bank speech  | 
27 October 2017

Uncertainty is one of the few certainties in monetary policy decision-making. It enters at nearly every stage of the process - from understanding where the economy is at the moment to knowing where it will be in the future. Tonight, I will discuss some of the main ways that uncertainty affects things. In doing so, I will draw on the 'Superforecasting' template described by Philip Tetlock. I will also discuss the monetary policy reaction function, which is one area where we can try to minimise uncertainty.

In describing these various manifestations of uncertainty, I will outline some forthcoming changes to the way uncertainty is presented in the RBA's Statement on Monetary Policy. The intention of these changes is to portray uncertainty in a form that is usable and understandable. I would also like to discourage an excessive focus on false precision.