ABSTRACT
In a commentary at a 1993 Reserve Bank conference in Sydney, I reverted to my historical review of the role of monetary policy. In my 1951 inaugural lecture I had expounded a Keynesian view of “the unimportance of money”. I had by now changed my mind. Monetary policy was important. But financial deregulation seemed to have stripped the central bank of almost all its monetary policy instruments. The Governor, Mr Bernie Fraser, pointed out that “short-term interest rates are now virtually the only monetary policy instrument”. I asked whether this was enough.
