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https://www.theguardian.com/business/2023/apr/13/rba-accused-of-dereliction-of-duty-for-dismissing-corporate-profiteering-as-a-cause-of-inflation>
"The Reserve Bank has wrongly dismissed corporate profiteering as a cause of
inflation, according to new research, and instead continues to warn against a
nonexistent wages breakout.
A paper by the Australia Institute, a progressive thinktank, has been published
amid an intensifying debate over the causes and remedies to inflationary
pressures that are weighing on households.
The research is critical of the stance taken by the RBA, led by the governor,
Philip Lowe, and the methodology used to deny there has been profit-taking
during the pandemic.
“Attempts to dismiss the role of excess profits is a dereliction of duty on the
part of monetary policymakers,” said the paper, co-authored by economists Greg
Jericho – who is also a columnist for
Guardian Australia – and Jim Stanford.
“Workers have already paid once for the current inflation, through rapid
erosion of their real wages. They are now being forced to pay again, through
rising unemployment and further real wage cuts, in order to solve a problem
they clearly did not cause.”
Australia’s annual inflation is at 6.8%, a figure that has moderated recently
but still sits well above the central bank’s 2% to 3% target. Food, power and
rental prices are among the significant drivers, which are all major sources of
pressure on households.
The RBA lifted borrowing costs at 10 consecutive meetings to 3.6% in a bid to
dampen consumer demand for goods and services that surged in recent years. It
then paused the hiking cycle in April.
Pent-up consumer demand has been magnified by issues in global supply chains,
due to pandemic-related constraints on production as well as interruptions in
the energy market caused by the Russian invasion of Ukraine.
But the impost on households, through higher borrowing rates, may not have been
needed if companies didn’t take advantage of the pandemic and boost profits,
according to the Australia Institute."
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
