Oh boy. It seems like a real mistake to let Warwick McKibbin leave the RBA's Board at such a crucial and complex time for policymakers. I just hope the next government offers to reappoint him in 2013, and that he accepts this opportunity. The AFR reports today:
"A Reserve Bank of Australia board member has cast doubt on the potency of the bank’s monetary policy amid global inflation. The comments, from Australian National University economist Warwick McKibbin, came as analysts suggested differences within the RBA board on the risks of raising interest rates in what RBA member Roger Corbett called a “bipolar” economy. Professor McKibbin yesterday told the British Chamber of Commerce in Sydney that empirical data suggested monetary policymakers were unable to offset any generalised world inflation shocks. “For every 1 per cent of global inflation, the common factor across the world’s economies is 0.6 per cent,” he said. “So the contribution of domestic monetary policy is relatively small compared to the contribution of the global economy in an inflationary environment.” Rising fuel and food prices are fuelling global inflation and putting further pressure on central banks such as the RBA as well as the People’s Bank of China to raise interest rates as they also deal with booming domestic
economies."
