Outgoing Reserve Bank governor Philip Lowe heads to the annual Jackson Hole retreat, as inflation falls globally and pressure mounts to ease monetary tightening.
| Reserve Bank governor Philip Lowe descends over the Grand Teton mountain range in Wyoming this week for his last Jackson Hole retreat and will likely take comfort in the hawkish company.
While the worst of the inflation shock might be behind them, a global slowdown looms, while China contends with deflation and a stuttering pandemic recovery, and US 10-year Treasury yields skyrocket.Some economists such as Democratic Party acolytes Jason Furman and Paul Krugman suggest shifting the Federal Reserve’s inflation target higher to 3 per cent from 2 per cent. But such a dangerous move risks changing inflation expectations and could result in a resurgence in inflation.
But more promisingly Lowe, who will not be giving a speech at this year’s event, and his fellow central bankers in the United States and Europe are disciplined and holding fast.“There were times during my governorship when people were saying, ‘Well, inflation’s a bit low, so we should lower the target.’ And recently, I’ve heard people say, when inflation’s a bit high, that we should raise the target,” Lowe told parliament.
Christine Lagarde is also not for turning, although EU officials are mulling a pause, while further rate rises are expected in the UK this year.
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