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."

Thursday, September 1, 2011

RBA: Inflation rate is "a bit troubling, but not out of control"

Kartik Misra: Mr Stephens, with a two-speed economy and the likelihood of a bout of Dutch disease, isn't monetary policy too blunt a tool to manage the Australian economy? So shouldn't the RBA just keep the rates neutral and let supply-side policy do the work?

Mr Stevens: Well, there are multiple speeds in the economy. That is actually always true. It is probably a bit more true now than on average. In the end, though, it is the central bank's job to try to preserve the value of money and promote financial stability. Supply-side policies can certainly help that or hinder it, depending on how they are operated, but we have to take supply-side policies as given and do our job of containing inflation pressure while taking account of the impact on the real economy [CJ: All clear to this point]. As I said earlier, right now the unemployment rate is around five, where it has been for a while; the inflation rate is a bit troubling but not out of control. I think from that overall point of view we are travelling okay [CJ: I find this next sentence a little worrying. Stevens is now giving the impression that the RBA does target both employment and inflation, which in other passages he has clearly stated is not the case.]