Oh dear. Here is another example of what an incredible mess the RBA's Board composition is becoming for the Bank's credibility. While demonstrating he had not read the numerous post-1996 "Statements" signed by the RBA Governor and the Treasurer that formally prioritise inflation-targeting over employment and growth considerations, AFR columnist, Alan Stokes, claimed the other day that only highly-conflicted "business people" on the Board "saved us" from higher rates. Forget the fact that core inflation, which strips out the impacts of the floods etc, has been, in the words of Ric Battellino, "surprisingly" high, and about 40% above the RBA's implied target, for the last half year. This growing perception, which I have been writing about for longer than anyone I know of, is, as I have consistently anticipated, doing very serious damage to the RBA's institutional inflation-fighting credibility with financial markets and, in the end, consumers. Here is Stokes:
"True, rates haven’t risen further, but they would have if Stevens had got his way. Only business people on the RBA board saved us. Now the usually sensible academic and outgoing RBA board member Warwick McKibbin wants fewer real-life people on the board."
