There is a tide in the affairs of man which, taken at the flood, leads on to fortune. Or, in the case of today’s Reserve Bank information revolution, greater independence.
The timing of the RBA’s new communications policy is exquisite. A still-newish governor hits a brand-new federal government with a policy that has significant political risk for Canberra while entrenching the RBA’s independence behind the barbed wire and machinegun nests of monthly commentary on the government’s economic performance – among other things.
And the RBA is off to a strong start, the minutes of its November meeting released today mowing down the febrile attempts of Costello and Howard to twist the CPI numbers and then sniping at the big-spending start to the election campaign:
This meant that fiscal policy was roughly neutral in its overall effect on growth as conventionally measured, the recent initiatives having offset the “automatic fiscal stabilisers”.
Cop that little warning shot, Kevin and Wayne – the automatic stabilisers have been neutered by vote buying, fiscal policy damned with very feint praise as “roughly neutral”, and that only when “conventionally measured”.
Publishing the board minutes and providing immediate commentary on the meetings’ monetary policy decision does more to reinforce RBA independence than any letter of intent between treasurer and governor. Showing the workings of the RBA board not only keeps markets better informed – and therefore “guided” – it helps keep everyone honest.
In the process, it has potentially dealt the RBA board a stronger political hand, meaning RBA board appointments just became a much more serious matter for any treasurer.
Nice work, Guvna.
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