“The Reserve Bank is a dead certainty to put up interest rates again when it meets in three weeks. Or maybe not. Glenn Stevens’s first major speech as Reserve Bank governor sparked a flurry of predictions from economic pundits but they remain divided on exactly what it was he was telling us”.
Steve Burrell makes quite a powerful case that the Reserve should be more direct and open in its communication.
This is an old theme but a goodie. A leading economist recently told Henry in the wake of some RBA communication: “they have obfuscated – failed to own up to their mistakes and avoided saying they have a ‘bias for tightening’.” So, despite Stevens’s proclaimed Christian values and conscientious nature, it seems there is still room for improvement in the Bank’s public utterances.
It’s like Moses doing a progressive reveal with the tablets. “You shall have no other gods before me. … Now tune in next week for another message from our sponsor”.
The “bias for tightening” is now on the record – not that it could be noted from Mr Stevens’s printed speech, but in response to a question from one of his mates in Sydney. But economists taken as a group (herd? mob?) are confused, so it’s not yet all sweetness and light, which is the point of Burrell’s article and the rather nice graphic that accompanied it.
Henry’s more important message back in August was: “But the bigger challenge for Governor Stevens will be to confront and subdue Australia’s current inflationary pressures without unduly hurting economic growth and jobs. It is sadly the poorer members of Australian society who will suffer most, and this will worry Glenn Stevens quite a bit, as it should”.
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