I’m investigating the origin of this target. I want to know the basis for its creation and on going maintenance. It is not clear to me why the target should not be 0%pa.
If the Bank wants to preserve the purchasing power of the currency then 0%pa is the correct target. Now, for political reasons, positive inflation is desirable to a Government. But then who would accuse the Board of the RBA of submitting to political interests? Moi?
If any readers have tips, I’d be happy to hear from you as I work through the dark, gloomy, arcane language of former RBA Governors’ speeches and scribblings.