SM

Yes. Lowe did do his job. He did what he had to do because of the inflation caused by the spending of the Morrison government during Covid, and now the Albanese government, spending like drunken sailors to bribe the gullible, and disguise their extreme, totalitarian, Socialist agenda.

Labor-created inflation?
Foxy,
Yes but I'd call Socialist instead of Labor as this isn't just an Australian outcome, it's a world-wide mess !

Foxy,

I'll small words since you clearly don't know economics.

The inflation in Jan 2022 was 3.5% in April/May at election time it jumped to 5.1% up to this point, Labor had always been calling on the government to spend more. This is the point at which inflation could have been nipped in the bud.

The two tools to do this are:
1 Using fiscal policy, i.e. the government cuts down spending. This is the simplest and quickest and entirely in government control.
2 Using monetary policy i.e. the RBA raises interest rates and people cut down spending.

Labor ramped up spending and boosted inflation to new highs leaving the RBA to do the dirty work by ramping up interest rates as the cost of living shot up.

The high inflation and interest rates could have been mitigated but Labor chose not to do so. The result is entirely due to Labor's ineptitude.

Economics is a misnomer, it really is just public coffer manipulation & misappropriation in favour of those who already accumulated more than their merit would enable them to do.
The whole system from Taxation to wrongly named economics is a Govt sanctioned manipulation !

The ALP has been in government for barely 12 months. Even if they had pulled every anti-inflation lever available to them from day one (eg massive spending cuts, massive taxes increases etc) to suck money out of the economy, we'd still be seeing inflation at these high levels today.

The powers available to a government to combat inflation are primarily fiscal ie cut government spending, decrease the money supply. But these aren't spigots....you can't just turn off the taps and see immediate change. These things need to work through the system and take a long time to have measurable effects.

The inflation we see today was the result of years of profligacy and slack fiscal policy by the previous government under both Turnbull and Morrison. While its very true that the then ALP opposition weren't calling for an end to the profligacy, its hardly their fault that it occurred.

The Australian people are paying the price for their enthusiastic support, in the main, for the lockdown mania and all that entailed, including massive government spending to pay people to stay at home and cease any productive work. But they don't want to hear that so the search for scapegoats is on. But the current government is the wrong scpegoat.

All that said, it is also true that the current government is doing very little to fight inflation and will therefore be justly culpable in a year or two if inflation isn't conquered - which will almost certainly be the case.

These problems abound throughout the world. Of the two broad levers available to fight inflation - fiscal and monetary policy - fiscal is now off the table. No government is in a position to run sustained government surpluses by cutting spending and/or increasing taxes. There is no political will to adopt any of those measures so the entire anti-inflationary stance falls to monetary policy.

The ALP will be rightly blamed for whatever inflation is around come the next election, but can't fairly be blamed for any such problems a mere year into its tenure.

As to Lowe, well he's the ultimate sacrificial lamb, carrying the load for all the errors made by the political class.

Given that no government was ever going to do what was required on the fiscal front to right economy, the RBA was forced to make interest rate policy do all the work.

But the populace don't like the medicine and attack the doctor. Somehow they think there is some other way to attack inflation that will be painless and whine when no such miracle is forthcoming.

To be sure, Lowe screwed up a year back with his inflation and interest rate forecasts. But he wasn't alone there with most central bankers around the world making similar errors. It'll take several years of economic and psychological analysis to understand why that was the case.

But having recognised the error, he moved to fix it. Interest rates were always going to be forced up -it was just a question of timing. He went later than he should have but the results are really the same.

So, Lowe, unfairly blamed for the errors of the political class, is gone. Let's hope the new governor fares better. But you should note that she's not talking at all about a change of policy - because high interest rates is the only policy possible.