RBA’s inflation target invites rethink

January 8, 2020
RBA’s inflation target invites rethink

A growing number of economists believe the Reserve Bank of Australia should reduce its 2 to 3 per cent medium-term inflation target to bring it into line with global peers but not before it has thrown everything at restoring growth and exhausted the weapon of interest rate cuts.

Yarra Capital Management macro and strategy chief Tom Toohey said: “The RBA remains in the unenviable position of not being able to meet its legislated inflation target for a record 45 straight months.”

He says evidence suggests the current range is too high, and says Britain, the US, and Canada all have a 2 per cent target.

Read more…. (subscription to The Australian Financial Review required).