The Australian central bank governor says he doesn’t know how high interest rates will have to go to get rampant inflation under control. That may be the first thing he has said that I believe.

They are a clueless bunch in Canberra and Sydney. Firstly Governor Lowe said with confidence quite recently that interest rates would not increase in Australia until at least late 2023. More recently he about faced and set off at double pace in the opposite direction and is jacking up rates like there is no tomorrow. I have the impression that he read my blog posts and came to see the error of his ways. He is also explaining that while he takes the public criticism, there are other members of the RBA board making these rate decisions on a collective basis, not just him. That sounds like a pathetic attempt to deflect blame from himself. When he says he is not complaining about it, he is complaining very loudly.

Lessons for Lowe: inflation is being caused fundamentally by exorbitant growth in the money supply engineered in large part by credit expansion under a policy of quantitative easing. It has been exacerbated by on going Government deficit spending intended to be partly transfers to favoured political groups and partly stimulatory. Until those two forces stop, inflation won’t. The RBA is trying to bash people into much reduced spending on the one hand and fanning the flames of inflation with the other. I believe Lowe remains an embarrassment and I would have liked to see him retire this afternoon. However, I’m not confident his successor will be any less clueless.