Philip Lowe: Some echoes of Melville

Text of the Sir Leslie Melville Lecture by Mr Philip Lowe, Governor of the Reserve Bank of Australia, Canberra, 29 October 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you for the invitation to deliver this year's Sir Leslie Melville lecture. When Ian Macfarlane delivered the inaugural lecture in this series in 2002, he said: 'any objective assessment of achievements would place Sir Leslie among the most distinguished Australians of the past century'. It is a great privilege for me to be able to honour those achievements today.

Leslie Galfreid Melville had a long and close association with the Reserve Bank of Australia. He was a member of the Reserve Bank Board for most of the time between 1960 and 1975. And before joining the Board, he played a critical role in the debates that shaped the mandate given to the Reserve Bank in 1959. It is six decades now since that mandate was passed by Parliament. It has more than stood the test of time. From this perspective alone, we have a lot to thank Leslie Melville for.

In today's lecture I would like to discuss two issues that Melville had strong opinions on.

The first is the appropriate objectives of the central bank.

And the second is his view regarding the impossibility of zero interest rates.

Both of these issues have echoes in today's discussions of monetary policy.

Central Bank Objectives

Over recent decades there has been much discussion in the academic and policy communities as to whether a central bank should have a single mandate - price stability - or a dual mandate - price stability and full employment. In practice, we see examples of both around the world.