The titans of Aussie monetary policy, from across the ideological spectrum, have come together with a great idea, at the AFR:
The current monetary policy regime in Australia is “inflation targeting” –keeping inflation in a band between 2 per cent and 3 per cent over the cycle. Inflation targeting served Australia well for a long period from its adoption in the 1990s. It defeated the wage-price spirals of the 1970s and 1980s, where the expectations of high inflation caused high wage demands, which in turn led inflation to be high.
…The question that needs urgent attention is: what is the appropriate monetary framework in a post-COVID-19 world?
