Regime-shifts and post-float inflation dynamics of Australia

► This paper analyses the nexus between inflation and its uncertainty in the post float era. ► It uses a Markov regime switching model to capture the long-run stochastic trend and the short-run noisy components. ► The results show that in the post-float period there is significant deviation from the mainstream Friedman paradigm on inflation and its uncertainty. ► The paper also reviews the plausibility of rival paradigms to explain this paradoxical behaviour. ► These results may help the authorities in designing the monetary policy to combat the adverse effects of inflation and inflation uncertainty for Australia.