Uren on RBA Director Warwick McKibbin going thermo-nuclear

Two outstanding articles today by The Australian's David Uren, who is one of our most thoughtful economic commentators. The first is a brilliant piece on the RBA Director Warwick McKibbin, who has now gone public about his desire to serve another term (HT: Stephen Kirchner). I have previously covered this issue on several occasions here over the past few weeks. Reappointment is a must as far as I am concerned. Sure, Warwick is sometimes a little too aggressive in his communications, but that is a super small price to pay for his world-class expertise and highly-valued independence. While the Treasurer would presumably be most irritated by Warwick's criticisms, Warwick is right: we need as much solid public debate on policy as is possible, even if you don't agree with what he says. We also need much more independent economic horse-power on the RBA Board, as I have argued for a long time now. And I have proposed a solution for the Government's Ross Garnaut vs. McKibbin dilemma: appoint Garnaut as a replacement for McGauchie, when he retires in March, and keep McKibbin. That way you get more economic firepower combined with a likely more sympathetic economist in Garnaut. The second piece is a very good summary of the challenges facing the RBA's inflation forecasting models, and leverages off Matty Johnson's recent research.