During the 1980s and the early 1990s, the RBA sought to establish a measure of control over the economy and define its role in a difficult monetary context. It had been assailed by neo-liberal critics and immersed in political controversy over its performance and perceived lack of ‘credibility’. The charges, to reiterate, were that the Bank was too close to the government, that is, not independent enough; that it was soft on inflation; and that it lacked a coherent policy framework.

We will deal with the independence issue in later chapters, but on the second charge, crunching inflation certainly helped take much of the steam out of the criticism that the Bank was soft on inflation. In a short period, the Bank had clarified its goals and tackled inflation head on. As Ian Macfarlane observes: ‘while all the debate was going on, inflation was actually falling to its lowest level in a generation. From the Bank's perspective, it was this outcome that ultimately ended the debate in our favour.’

The Bank had also been quietly working at a new set of ‘post-checklist’ operating procedures to guide its behaviour and make its actions more accountable and transparent. These changes helped to ‘normalise’ monetary policy in the 1990s, a major shift from the uncertainties and policy groping of the previous two decades.