John clarifies that while he does not think Australia needs to increase the RBA's implied 2.5% pa inflation target (it is already the highest in the developed world!), he does think we need to revisit its independence. This will be enough to give our Money Mandarins some pause for thought. Naturally, I strongly disagree in the context of setting monetary policy, although I do agree in respect of the RBA's responsibilities for financial system stability and the payments infrastructure. Of course, everyone is entitled to their own opinion, and John is a formidable intellectual adversary. Here is his response...
I wasn't as clear as I might have been, but I was linking to a discussion about the US inflation target, not Australia's. I don't think Australia needs to increase its inflation target, though I do think we need to look hard at central bank independence. I'll update my post to clarify this.
