It’s a cheap shot, sure, but reading the minutes from the Reserve Bank’s Monetary Policy Meeting in Sydney on October 7, one can’t help but be struck by a certain disconnect between the language of the minute and the rather stark reality it represents.

Let’s decode.

The RBA says: Although the September quarter CPI, to be released before the next meeting, was likely to show an increase of around 5 per cent over the year, members noted that the current staff forecast was for inflation to start to decline in 2009. Moreover, the recent deterioration in global growth prospects, together with the more difficult market conditions even for creditworthy borrowers, increased the risk that demand and output could be significantly weaker than earlier expected. In that scenario, inflation would most likely fall faster than expected previously.

Which is to say: People are probably going to lose their jobs. Nothing cures inflation quite so effectively as the reduction of increasing numbers to sudden poverty.

Peter Fray

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