In a comment on his blog, Bill Mitchell responds to Mark Kinnear by arguing that RBA staff and public-facing economists adhere to New Keynesian frameworks that prioritize NAIRU-based reasoning, and that this outlook helps justify higher interest rates and shields bank profits.
Bill Mitchell argues RBA economists use New Keynesian/NAIRU reasoning and genuinely believe unemployment must rise to reduce inflation.
A Monetary Policy Board member publicly said there is no evidence wages are driving current inflation, contrasting with the governor’s call for higher unemployment.
Mitchell contends that RBA rate hikes also protect bank profits, with bank-aligned economists pushing for higher rates.
That is a position that I have been arguing for over the last several years in countering the mainstream narratives. RBA governor makes another self-serving public presentation ignoring the dismal reality she is helping to create (July 30, 2026). Apparently the RBA has the interests of the unemployed it is putting out of work at heart.
RBA rate hikes – ideology triumphing over evidence and reason (May 7, 2026). Interest rate hikes will not get ships moving through the Strait of Hormuz more quickly (March 12, 2026). RBA bows to financial market pressure and boost bank profits at the expense of low-income mortgage holders (February 5, 2026).
The extraordinary juxtaposition of these views is one thing. Background reading I have traced the shifting RBA positions on the underlying causes of the inflationary pressures for many years now and these blog posts provide a brief history of my concerns covering the pressures during the pandemic and then following the Middle East fiasco: 1. Australian Treasurer refuses to use his legislative power to rein in the rogue RBA (September 25, 2024).
"There is no wages problem in Australia that is driving the current inflationary pressures. The RBA is just making this up." In more recent times Governor Bullock certainly has NOT been saying this and reiterated there is "no wages break-out" at yesterday's post meeting presser. However, Bullock did make note of higher
Bill's saying that the RBA economists are infested with NK type thinking and NAIRU concepts which means that they want to push up interest rates to increase unemployment as so reduce the rate of inflation. Also that they do genuinely believe in what they are saying. I'd go along with that. I'd also go along with Bill's
Let’s be honest; The only reason why the RBA hikes rates is to protect bank profits from being eaten away by inflation.
Michele Bullock- "I don't like to talk about this NAIRU". Why so shy,Michele? You have obviously been so thoroughly brainwashed by the economic conventional wisdom that you should have no reluctance to join in the current group think. By your actions you will be known. While we have brain dead politicians in power (and
The Federal Open Market Committee approved the following statement for release by a 12 – 0 vote: The Committee decided to raise the target range for the federal funds rate by 1/4 percentage pointto 3-3/4to 4 percent, in support of the Federal Reserve's dual mandate. The Committee is continuing its policy of maintaining
@ Mark, "<em> "Let’s be honest; The only reason why the RBA hikes rates is to protect bank profits from being eaten away by inflation." </em> If we were really being honest I think we might allow that the central bank which is really a part of government might have a somewhat less nefarious motive. I would say the RBA,
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