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 Stevens: RBA's objective is to 'preserve the purchasing power of money'

As discussed before, I was not especially comfortable with the way Stevens addressed questions on the RBA's mandate. He obfuscated and led the lay observer to believe they had a dual mandate while being quite technically correct in explaining that, in fact, the RBA are a first-order inflation-targeter with growth and unemployment looked after as derivative consequences. I also thought Stevens was outright misleading when at one point he claimed that the RBA was 'ahead of the curve' with its rate settings, while repeatedly acknowledging that current core inflation rates were 'surprisingly high' and 'troubling'. I suspect Stevens's dancing around this issue is linked to the political independence concerns that the RBA apparently holds, which have been publicly expressed by long-standing Board member Warwick McKibbin in recent days. In this response, Stevens is clearer: they have one main objective, which is to preserve the value of money.

Mr Stevens: We aim to contain the growth in the CPI at between two and three per cent. That is supposed to be a reasonably representative index of cost of living, although there are other indexes, as you would know, that are more tailored to particular groups. But that is what we are trying to do; we are trying to preserve the purchasing power of money, and not particularly the purchasing power of the money of the richest or the poorest but the total.