The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Wednesday, August 10, 2011

McKibbin: US should announce an inflation target of 5%

I have long questioned whether so-called 'inflation-targeting' regimes would withstand a serious test. Australia's regime failed before the GFC (with 4.7% core) and was saved by the crisis. If global inflation turns up, the RBA will find it very hard to keep core inflation within the 2-3% pa band, as it is today. That means the spectre of higher sustained inflation and higher equilibrium interest rates. Here is Australia's best economist writing in The Australian today:

"[A]nnouncement of an inflation target of 5 per cent by the Fed would help as well."