Guy Debelle: Monetary policy in 2020

Speech by Mr Guy Debelle, Deputy Governor of the Reserve Bank of Australia, at the Australian Business Economists Webinar, online, 24 November 2020.

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

Central bank speech  | 
24 November 2020

I spoke at the ABE annual event 2 years ago in December 2018. In that speech, I talked about the lessons and questions from the global financial crisis that had occurred 10 years earlier.

Today, the global economy has experienced another crisis, but one which has taken a very different form. The source of the crisis this time has been a health event rather than a financial one. The contraction in output in the global economy and in the Australian economy has been considerably larger and more synchronised than in 2008/09. But some of the lessons we learned from the financial crisis have helped to lessen the impact this time around and will help in speeding the recovery that is underway.

The lessons that I highlighted in 2018 were:

  1. Leverage matters. The regulatory response since 2008 has been aimed at addressing the leverage in the core of the financial system
  2. Timely policy responses are effective. In a crisis, go fast and go hard. Don't die wondering
  3. Plumbing can sometimes really matter. Keep the credit pipes flowing
  4. Targeted policy responses are effective.