What you have to understand about SMH Economic Editor Ross Gittins is his own undeclared role as a virtual media liason officer for the Reserve Bank. Because of the lack of transparency from our central bank (it does not release minutes of its meetings, does not hold media conferences and its governors do not grant interviews), it manages its public image through a couple of well chosen media pundits – Gittins being one of them.

But in return for this privileged access to our most important economic policy-making institution, Gittins tends to represent the bank’s views to the wider public. This role is critical at a times, such as now, when the bank is at odds with the government and the economic commentariat. And that is exactly what Gittins is up to now – doing the bank’s bidding by justifying an increase in interest rates that the government and a lot of independent commentators have good reason to believe is a high risk gamble.

The point here is that if Mr Gittins is going to use his columns to depict himself as some of kind of cleanskin (and there’s no denying a lot of points he makes are on the money), he should really front up about his ‘insider’ arrangement with the RBA. And the bank itself should clean up its own act and face its critics directly, rather than hide behind newspaper columnists.

Against this background, you can see that the ‘banning’ of Gittins by Costello is just the most publicly visible manifestation of the undeclared war between Treasury and the RBA over policy-making.

CRIKEY: This is an interesting theory but we certainly doubt there is any formality or obligation in whatever relationship exists. However, during the Crikey editor’s three years as Herald Sun business editor working with Terry McCrann, there were several occasions where I was amazed at the certainty with which McCrann would declare RBA moves. He was right virtually every time so there was obviously some sort of direct feed going on.