Good news came on Thursday.
Another solid month of job growth kept the unemployment rate steady at 4.1% in January.
Australia’s job market is incredibly resilient The A positive narrative of the post-pandemic economy.
We are on the other side of a global health crisis and have come out of a deflationary event in a generation with an unemployment rate consistently below one percent where it was in the dog days of the late 2010s.
We have never had a large share of the workforce.
For many families, this is the difference between experiencing cost-of-living pressures and experiencing a full-blown crisis.
But the jobs market A lot is it good
This is the most crucial argument Tim Wilson has made within 48 hours of being appointed as the new shadow treasurer.
The Liberal MP, who was defeated by the skin of his teeth in the last election, is making waves talking to the press.
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His comments, reported in nine newspapers, drew a lot of attention, saying the coalition was ready to “review” the Reserve Bank of Australia’s 80-year-old “dual mandate” to pursue both low and stable inflation and full employment.
Wilson reckons the RBA is too soft on inflation.
The central bank should have raised rates longer to ensure inflation remains under control in 2025, despite a weaker economy.
Jim Chalmers came out early Thursday morning with a media release titled “Tim Wilson’s Plan for High Unemployment.”
After welcoming the latest jobs data, ACTU secretary Sally McManus also went on the attack.
“It’s a disgrace that Tim Wilson’s first economic policy is to have more Australian workers unemployed,” McManus said.
Wilson was not the first conservative politician to say that his country’s central bank should focus solely on bringing inflation under control.
For example, Donald Trump’s Vice President in his first term, Mike Pence, recently campaigned on eliminating the employment portion of the US Federal Reserve’s dual mandate by 2023.
But it’s an odd line as the Liberals try to win back votes from the populist right wing.
Mervyn King, the former head of the Bank of England, in 1997 branded those who said monetary policy should be set regardless of economic collapse as “inflation nutters”.
In an interview with Guardian Australia’s Dan Jervis-Bardy on Thursday, Wilson made it clear he “definitely supports a dual mandate”.
“But the question is, will the RBA get that dual mandate right? They’ve got it wrong,” he said.
“We’ve reached a situation where inflation is out of control. They’ve clearly misread inflation, so they’re clearly not paying enough attention to inflation.”
Jonathan Cairns, chief economist at Challenger and a former senior RBA official, said a central bank with an employment and inflation mandate was controversial and supported by history and research.
“We have a dual mandate because monetary policy affects employment and inflation. You want to target inflation subject to avoiding significant costs on employment.”
Lucy Ellis, Westpac’s chief economist and former head of the central bank’s economics department, said: “It has long been understood that even a central bank with only an inflation mandate cares about employment.”
But Kearns said the RBA made an error of judgment last year by cutting interest rates three times to quickly reverse course after inflation ends above 3% in 2025.
“How you estimate inflation and employment affects the path of monetary policy,” he says.
But he fundamentally disagrees that the RBA is now structurally focused on jobs over price stability.
“What we call policy errors are more about judgments, not an inappropriate balance of inflation and employment.”
Ellis goes further.
She said the change to the RBA’s agreement with the Albanian government on the conduct of monetary policy introduced a stricter specification for achieving inflation targets by clearly targeting the midpoint of the 2-3% target range.
“My study on them [the RBA’s] The policy decisions and rhetoric since the new announcement have, if anything, focused more on small deviations in the inflation trajectory.
Wilson, at his heart, is an “inflation nutter” that remains an open question — and one his political opponents are eager to ask every chance they get.
Patrick Cummins is Guardian Australia’s economics editor
