Vital Signs. Yet another year of steady rates. What's the point of the RBA inflation target?
- Written by Richard Holden, Professor of Economics, UNSW
The Reserve Bank kicks off its first meeting for the year next Tuesday facing the same dilemma it did throughout last year.
It hasn’t got easier.
The bank has a very public, fairly clear objective: to keep inflation between 2% and 3%. But it keeps missing it. Over and over and over again, and on the downside.
As the following chart shows, inflation has been below the bank’s target band for nearly all of the past four years.
- ^ between 2% and 3% (www.rba.gov.au)
- ^ released on Wednesday (www.abs.gov.au)
- ^ National Press Club (www.npc.org.au)
- ^ focus on other things (www.rba.gov.au)
- ^ Tinbergen Rule (www.jstor.org)
- ^ Vital Signs: inflation misses again, so where does the RBA go next? (theconversation.com)
- ^ With well over half of the economy coming from private spending, already soft consumer spending could be hit further. (theconversation.com)
- ^ despite the lowest year-end unemployment rate since 1969 (www.thebalance.com)
- ^ this way (www.rba.gov.au)
- ^ There is an active debate (theconversation.com)
- ^ central bankers (www.rba.gov.au)
- ^ Larry Summers (www.brookings.edu)
- ^ to borrow from Hamlet (shakespeare.mit.edu)
- ^ No surplus, no share market growth, no lift in wage growth. Economic survey points to bleaker times post-election (theconversation.com)
Authors: Richard Holden, Professor of Economics, UNSW
Read more http://theconversation.com/vital-signs-yet-another-year-of-steady-rates-whats-the-point-of-the-rba-inflation-target-110574