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Our constitution provides the mandate for the Reserve Bank: “To protect the value of the currency in the interest of balanced and sustainable growth.” The constitution sets out the mandate in this way for a simple reason. It is an expression of a public good. Attaining that public good helps us reach the kind of economic growth we want. It does not mean that achieving our mandate alone will necessarily generate that outcome. But it is necessary to achieve it. Many other policies and behaviours play similar necessary, but not sufficient, roles. Having been given a mandate, the central bank needs to achieve it. That requires setting out an operationally relevant policy target and ensuring the institution has the powers to hit it. Central bank independence is really about giving the Reserve Bank the institutional freedom to get on with those two things. Independence also creates space for the Bank to consider how best to achieve the mandate, in consultation with the government, and wit...

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