Thursday, 12 August 2010

Reserve Bank member crossing a delicate line

An independent Reserve Bank is something of an anomaly in a democracy where an unelected group or people get to make major decisions that have an effect on all of us. For one thing, when the board makes a mistake and the economy suffers, it is not its members who get punished but the government, which has granted it an independent role in monetary policy. It is a delicate balancing act for  government and bank and that the system generally works without public tension reflects well on the political sensitivity of those involved.
Part of that sensitivity has to be each party carefully choosing the words it uses about the other. Too much public controversy and politicians will eventually insist that if they are going to get the blame they might as well be responsible for the decisions.
It seems to me that Reserve Bank board member Warwick McKibbin is now getting close to going too far in his criticisms of the Labor government over the benefits of its stimulus package. He has become quite a major player in the economic debate in a way that can be seen as party political. If the professor wants to play this game of a partisan participant,  he should stick to being an ANU professor and forget about being a Reserve Bank board member.
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