Hauser links monetary policy effectiveness to public trust
Public trust underpins both money's value and monetary policy effectiveness, Reserve Bank of Australia Deputy Governor Andrew Hauser said. Persistent above-target inflation and repeated shocks have made that trust harder to sustain.
Money rests on confidence
Andrew Hauser, Deputy Governor of the Reserve Bank of Australia (RBA), made trust the theme of the 24th Sir Leslie Melville Lecture.
He spoke at the Australian National University in Canberra on November 5, 2026.
Banknotes and bank deposits have no intrinsic value outside the monetary realm, he said.
Their value depends on confidence that others will accept them tomorrow at much the same worth.
That confidence, in turn, rests on central banks keeping prices stable.
Trust therefore supports not only central bank legitimacy but also the operation of monetary policy itself.
Hauser said central banks must earn it: in the decades following the 1980s, flexible inflation targeting delivered low, stable inflation alongside rising real incomes.
Repeated shocks test credibility
Hauser said persistent above-target inflation, particularly since COVID, had damaged central banks' record, while trust in public bodies had deteriorated more broadly.
Tariffs, wars, geopolitical tensions, pandemics and technological and environmental change now compound uncertainty.
He described a volatile, uncertain, complex and ambiguous world in which inflation is more readily pushed off target, forecasts are more prone to error and monetary policy trade-offs become harder.
Trust must be earned
Hauser presents trust as part of monetary policy's operating mechanism, not merely its public standing.
He ties that trust to confidence in price stability.
His warning concerns harder trade-offs and more forecast errors in a world of repeated shocks.
Source: Trust, expectations and monetary policy
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