The fascinating question of official leaking by the Reserve Bank to a couple of favoured financial commentators is back on the table today after News Ltd’s Terry McCrann devoted his whole column to arguing that an “insider” should be appointed to the vacant post of deputy governor.

It was hardly interesting stuff for Herald Sun readers but very much looked like the public payback required in return for leaks on interest rate movements.

The longstanding deal here is that McCrann operates as a promoter of the Reserve Bank’s cause in return for privileged access to our most important economic policy-making institution.

During three years as business editor of the Herald Sun in the 1990s, I was amazed how emphatically and correctly Terry McCrann would predict movements in official interest rates. His remarkable accuracy has continued ever since.

Earlier this year I called for new RBA governor Glenn Stevens to end the practice because it lacks transparency and the effectiveness of the arrangement is undermined by its public knowledge. Rather than relying on economists to read the tea leaves, we all increasingly just look to see what McCrann is predicting. Journalistically, this makes him a very lucky guy.

Today’s column would suggest the secret arrangement is continuing, although it might just be a “mating call” from McCrann to the new governor.

We know how much the Howard Government hates leaks and loves to control the political agenda, so it will be very interesting to see if McCrann and Stevens successfully head off Peter Costello’s plans to parachute in an outsider, thereby isolating Stevens at the board table.

Ian Macfarlane’s round of farewell interviews did the Howard Government no favours and Costello in particular would no doubt love to clip the wings of his hand-picked successor.

By taking the debate public through McCrann at this time, it would seem that Stevens is nervous the RBA insiders club will be broken up.

And McCrann should be nervous because his RBA drip has been the best source of stories he’s ever had, with the possible exception of Graeme Samuel (especially in the 1980s) and, of course, the News Ltd executives who feed him regularly when it suits their commercial agenda.

Peter Fray

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