Way back in June 2020 when Guy Debelle was still employed by Australia’s Reserve Bank (RBA), he made a speech in response to market jitters over the unprecedented expansion of bank credit. He said it would not lead to inflation.

In November 2021, the RBA Governor Lowe said he wasn’t expecting inflation to hit the 2% to 3% pa target range until late 2023 and so there would be no interest rate increases in 2022 but maybe there would be in 2023.

What was actually happening in the real world was rapid inflation, even as the good governor was drafting his speech.

Lowe eventually arrived late to reality and is now making more speeches about the serious dangers of our current inflation. Does he really think that anyone is listening to him any more?

When interest rates are low, people borrow more and hence even small absolute increases make burdensome increases in the repayments.

Interestingly enough, Guy Debelle no longer works for the RBA. I’m happy about that, although I’ll be happier still when Phillip Lowe leaves. Worryingly, though, Debelle now works for a company of which I am a shareholder.