Full employment becoming the equal goal of the Reserve Bank, which was a recommendation in the review into the central bank, is “highly problematic and unnecessary”, according to Sky News host Sharri Markson.
Ms Markson said it is one of the biggest and most controversial changes, and finance experts she has spoken to today say it could be very problematic.
“The RBA has historically had just one objective – inflation – and it has one instrument to tackle this – interest rates,” she said. “If you have to bring down inflation and it’s not in conflict with employment, then you wouldn’t need employment as an objective in the charter of the RBA, but if you have to bring down inflation and it is in conflict with the RBA’s new goal of full employment, the prevailing wisdom is you could not let inflation run.
“It has to be the top priority, not jobs, otherwise you’d end up with entrenched inflation and you’d need an even bigger stick to bring it down.”
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