Tony Moore writes: Excellent article by Maeve McGregor (“Confused, incompetent or blithely reckless: what’s up with the RBA board?”). Readers of Alison Pennington’s “Generation F’d: how neoliberalism consumed the future” will know that the Hawke government instituted a Prices Surveillance Authority after the 1983 economic summit to control prices, part of its prices and incomes accord with the trade union movement. This was the act of a Labor government that was not intimidated by oligopolistic companies conniving in opportunistic price rises.
Few journalists hooked on presentism or unaware of a world before neoliberal economic orthodoxy took hold would remember that a Prices Surveillance Authority existed. The PSA fell victim to Canberra’s love affair with economic rationalism aka neoliberalism from 1994.
Bring back the PSA, with very sharp teeth.
Dr John Nightingale writes: I’m reminded of 1975, when the RBA failed to cope with the oil price era because the world changed much faster than the macro-econometrics of the bank’s engine room. It wasn’t many years before the leading economists of the bank were lamenting their failures of insight. It’s all happening again.
Sandra Schmidt writes: Is it possible Philip Lowe is increasing rates with his fingers crossed hoping some miracle will happen before his tenure ends? He should be sacked. The last RBA governor did not raise rates as soon as an inflationary change occurred.
Erik Kulakauskas writes: McGregor’s article is first class, particularly the start, and I quote:
Dovish or hawkish? Another interest rate rise to come or several? Price-wage, wage-price spiral or no spiral? A weaker, weakening or stable economy? Is demand falling or not falling?
For all the linear thinkers out there, the Reserve Bank’s confused melange of contradictory statements, omissions, political spin and economic lingua franca in Tuesday’s official statement was something to endure, not behold.
But there are several more matters worthy of consideration. Even in his ultimate moments of candour or weakness Lowe acknowledges the real driver of inflation is prices. However, he keeps banging on about a wage-price spiral as the real bogeyman. This is very strange but reflects that he did economic theory at much the same time as I did and has failed to reset his mental button.
If he succeeds in creating a recession, unemployment goes up and real wages go down. Then we will have rising poverty, education will be interrupted, basic health will suffer for the poor and Lowe and his lot will toddle off on their merry ways. There is something fundamentally wrong with Lowe and his board.
Ross Pearce writes: I’d prefer economists to write on interest rate rises. It’s important that the columnist has some understanding of what is available to manage the economy in times of inflation, growth and recession. The article today is not up to usual standard.
Bill Wallace writes: The real problem is that our politicians are not adapting the control
mechanisms for the economy quickly enough. We grow up and learn of one way of doing things and never stop to wonder if there’s a better way in the new environment. There should be a multiplicity of levers that can be adjusted according to the circumstances, interest rates being just one. Our management of the economy has to become much more sophisticated than just using the blunt hammer of interest rates. The levers need to be able to manage specific areas of the economy without having major indirect casualties in other areas.
And associated with these levers, maybe the RBA needs to be given a new mandate or a new economic management body should be considered.
Michael Noonan writes: The RBA board is doing a very good job, particularly when you think of what a one-dimensional toolkit it has been given.
The article is very selective in its quotes and information. There is zero apparent thought about how much worse it would be for most Australians if inflation was to get out of control. And how much longer the adverse effects would last. Interest rates can be quickly wound back when circumstances change. Inflation can’t.
Historically speaking, interest rates aren’t very high at all. Some people have just been suckered into excessive borrowing by a few years of very, very low interest rates. As nobody else is doing a lot to lower inflation, if the RBA was not trying to do its main job, which is to keep inflation to moderate levels, then it should be sacked. But it is, and should be praised for that.
Journalists or politicians wanting to make themselves look superior, without having any practical suggestions about what the RBA should be doing differently, just make themselves look petty and stupid.
Gary Gibbon writes: It’s time the RBA governor and board were shown the door. Blind Freddie can see that the primary cause of inflation in this country is corporate profiteering and price gouging. Yet every month it’s mortgage holders and small businesses getting hit over the head and vicariously blamed by the RBA.
I could almost have forgiven Philip Lowe for his wildly erroneous predictions on low-interest rates into 2024 if he’d continued his earlier rhetoric calling for higher wages (which have never eventuated). But he clearly didn’t have the ticker and resolve, subsequently abandoning those ideas in favour of the old favourite and easily implemented interest rate rises. Fiscal policy adjustments aren’t even entertained.
It is class warfare and we in the lower and working classes are just being taken for mug cannon fodder by the corporate elites and their loyal mainstream media servants.
Kerri Watson writes: Lowe must go! The RBA has held the country to ransom long enough with its economic psychobabble about the risk of a wage-price spiral and the need to continuously raise interest rates.
Ask anyone on the street and they’ll tell you that wages are going backwards and have been for at least a decade. Lowe represents yesterday’s linear economic thinking — the world has moved on to “doughnut” economics (see Kate Raworth and others). Lowe must go now with the rest of this entitled group of yesterday’s older white men known as the RBA.
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