Michele Bullock: Achieving full employment

Speech by Ms Michele Bullock, Deputy Governor of the Reserve Bank of Australia, at the Ai Group, Newcastle, 20 June 2023. 

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

Introduction

I would like to thank the Australian Industry Group for the invitation to speak at this lunch today. It is great to be in Newcastle.

In recent times, my colleagues and I have spent a lot of time talking about the current bout of inflation in Australia and globally. The reason for this focus is clear: inflation is too high, and the longer this persists, the more damaging it becomes. It is in all our interests to bring inflation down and the Reserve Bank Board has been increasing the cash rate to achieve this.

But just because our inflation objective has been in focus recently, it does not mean that the other part of our mandate – maintaining full employment – has become any less important. Full employment is, and has always been, one of our two main objectives.

When discussing full employment, in the context of a central bank's mandate, economists typically talk about the non-accelerating inflation rate of unemployment – the NAIRU. I will come back to this concept. But, more generally, full employment means that people who want a job can find one without having to search for too long. As I will emphasise later, the number of hours of work that people can secure is also important in defining full employment.