Monday, 25 January 2010

Don’t mention the unemployed

I am bemused why it is that economists, especially those from the Reserve Bank, never mention those without a job when they start pontificating about increasing interest rates. They seem to have forgotten that the legislation governing the Bank ranks encouraging employment as being just as important as controlling inflation.
Yet the 5.5% of Australians who are unemployed look like  being forgotten again when official interest rates are next considered. The pundits and the market are all pointing towards another 0.25% increase which will further delay the day when all those without a job and who want one will be able to get one.
The Crikey Interest Rate Indicator suggests there is a 75% chance of a quarter of a percent rise.
As I read in the Paul Krugman blog this morning, respectable central bankers are worried about nonexistent inflation rather than actually existing unemployment.
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