Financial markets are on tenterhooks, trying to guess when inflation will arise, triggering a policy response. There’s not much at stake here for the real economy. Guessing the short-term time-path of price increases is a distraction from the important policy issues. It matters only to those betting in the casinos of financial markets.
Reserve Bank governor Philip Lowe, right, and his deputy, Guy Debelle. There is a price for holding rates too low. Alex Ellinghausen
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Stephen Grenville is a former deputy governor of the Reserve Bank of Australia and a non-resident fellow of the Lowy Institute.
