![]() The Statement avoided any discussion about full employment except that price stability in some way generated full employment even though the price stability required “disciplined monetary and fiscal policy”. It showed that inflation targetting had become its primary goal. This became very clear in August 1996, when the Federal Treasurer (then a conservative government) and the Reserve Bank Governor issued the – Statement on the Conduct of Monetary Policy – which set out how the RBA was approaching the attainment of its three identified policy goals. ![]() The manipulation of interest rates to fight inflation clearly intended to use unemployment as a policy tool rather than the policy target it had been during the full employment period. I have written extensively about how this shift in policy amounted to the central bank abandoning its legal obligations to maintain full employment. So the RBA became focused more or less exclusively on meeting an inflation target from the early 1990s. However, since the abandonment of monetary targetting in the 1980s (the failed Monetarist experiment), the RBA was increasingly influenced by the NAIRU concept, which is a core neoliberal contrivance to disabuse governments from spending sufficient amounts to maintain full employment. Well they have to say that because in as a historical fact, the Reserve Bank of Australia was constituted in 1959 to maintain full employment as one of its three goals (see Section 10 of the – Reserve Bank Act 1959 – Subsection 2). They said that they saw the “high rate of unemployment as a national priority and it wants to do what it can to support job creation”. ![]() The RBA told the Australian public on Tuesday that it was committed to doing “what we reasonably can, with the tools that we have, to support the recovery of the Australian economy.” The RBA are now employment champions – not! All in a day of paradigm shift in economics. And, within the decision is a point that I would have expected State Premiers to be up and arms about but, instead, there was silence. And the most significant aspect of that last decision was how much dodging and weaving went on to deny what they are actually doing. But the most significant aspects of the decision was to set the support rate on excess reserve balances to zero and increase their government bond buying program by 200 per cent. There were four elements to the decision, which I will explain. The governor Philip Lowe released this – Speech – to announce the decision. On Tuesday (November 3, 2020), the Reserve Bank of Australia made its monthly announcement with respect to the conduct of monetary policy.
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