I’ll be short & sweet on this issue because I reckon Ross Gittins says it all fairly well. It’s an issue I’ve been banging on about for quite some time now, and with good reason. I can’t stand liars and have little tolerance for fools, yet all we get treated to by our elected representatives are examples of the former who treat we voters as the latter.
I’ll say it again, and this time I have Gittins’ article as a backdrop. Politicians do NOT control interest rates. They influence interest rates, usually adversely, but simply cannot control them. The Reserve Bank of Australia board determines interest rates in this country and does a bang-up job too, if I may say! I especially like the statement Gittins includes in his piece from Reserve Bank Governor, Glenn Stevens:
“Since we now had a good system for allowing the Reserve to keep inflation low, a return to double-figure interest rates would be “unusual”.”
As Gittins points out so eloquently, fear and loathing over interest rates is transparent. Political it’s most definitely not.