Could someone explain why the RBA have virtually stated they're hellbent on keeping inflation "between 2 and 3 percent"?
I understand that deflation (i.e. negative inflation as distinct from falling inflation) is harmful to the economy. I also understand that persistently high inflation is damaging (note to Albo; note to "Sally with her Silly" wages push).
But isn't rigidly sticking to a narrow range, set at a time when the economic and geopolitical landscape were much different, potentially dangerous under current and foreseeable conditions? Or is it an iron Law of Economics - God's Eleventh Commandment if you like - that Thou Shan't Ever Changeth Thy Inflation Target?
Given we're heading towards anywhere between 7% and 10% inflation, wouldn't it be better to state a more accommodating target in the short term, say 4% to 5%, and wean it back to the preferred range over the medium term, lest we unnecessarily plunge the country into recession through relatively large interest rate rises off an extremely small base?
COF Price at posting:
$1.81 Sentiment: Buy Disclosure: Held
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