Given they are the untouchable sacred cow of modern finance, how do you fix an “independent” central bank when it goes rogue? Today this is not some curious academic question but one of urgent national interest priority.
For the past 36 months the Reserve Bank of Australia has trashed its mandate of keeping inflation within a 2-3% band balanced against sustaining full employment:
Only twice in 36 months has the CPI poked its head above 2% and not once has the more important “trimmed mean” measure done so. Yet throughout the period the RBA has not only not cut the cash rate, it has consistently talked up hiking. It was still doing so yesterday, using cherry-picked data and refusing to acknowledge beyond all reason that unemployment is a lagging indicator as domestic demand craters. As a result, all interest rate markets have crashed into forecasts of endless deflation, via the AFR:
