The Reserve Bank is trying to achieve something extraordinarily ambitious. It is hoping, and forecasting, to bring inflation down from a multi-decade high last year to the 2 per cent-3 per cent target range – while maintaining close to full employment.

However, a look at history tells us this is not how things have worked out in the past. The key statistical relationship that forms much of the basis of inflation-targeting regimes, the Phillips curve, suggests some scepticism may be warranted.