well the RBA raised rates.
see:
and heavily related that great star Mark the Graph
I want to go back into time and do a mea culpa.
I was one of those who thought the RBA was too slow in cutting rates. Everything around us at the time was showing inflation was dropping quickly and wages was NEVER a problem.
That proved wrong. It was wrong becaause the speed limit of the economy was now a lot lower than we previously thought. CBA economic research was first onto this ( after being like me hawkish on rate cutting.) Mark the Graph was also on the job writing brilliantly on this topic.
This also had consquences for fiscal policy. I was sympathetic towards the government. If the RBA is raising rates the budget should be at worst balalnced as Ken Henry has noted. A Government tightening fiscal plicy as the RBA is tightening monetary policy means avoiding a recession becomes quite hard.
However now wee all onow fidcal plocy has to be contractionary. The structural deficit is around $20b and this has to be cut.
I see nothing wrong with the government informing the RBA how much it will cut it. Neither wants to see a recession however the RBA does not want to see any supply side effect turn nito rising inflation!
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