An Australian newspaper group has called for a review of Reserve Bank of Australia operations
In light of the Bank’s “failure to meet its primary function of keeping inflation between 2 per cent and 3 per cent a year”.
- Consumer price inflation fell below 2 per cent in 2014 and has climbed back into the target range only on a couple of occasions since.
- when inflation is too close to zero workers cannot ask for pay rises and the economy cannot grow. Critics say the RBA should have cut interest rates much sooner to boost growth. If it had done so, unemployment would have been lower heading into the pandemic.
Huh. Yeah, missing this KPI has been a failure. Too-low inflation has also been a conundrum for central banks right across the developed-markets world, so the RBA is not alone. Still, a review would not go astray. It’d probably help shine a light on government fiscal failure also.