Whoops! Has RBA governor Philip Lowe just fallen off his path?

Reserve Bank governor Philip Lowe did a good job in round one against the backbenchers in Canberra Wednesday, with round two coming up Friday – up to a rather important and, I have to add, disappointing point.

That point was exactly nailed by Ross Greenwood on Andrew Bolt’s Sky News program Wednesday night – and Lowe’s position was then precisely challenged by the jobless numbers Thursday, almost laughingly dodgy as they were and embarrassingly embraced by a hapless hopeless commentariat.

As Greenwood said, Lowe might be talking the talk – but he was not actually walking the walk.

Yes, he railed against the evils of – especially entrenched – inflation. He spoke forcefully, repeatedly, admirably and oh-so very necessarily.

But, but, he was frankly and quite simply wimping out on delivery.

As Greenwood detailed, the RBA’s policy rate was lower - and significantly lower at 3.35 per cent, especially when you account for the level of our inflation - than all the major peers.

The Fed was at 4.5 to 4.75 per cent; the Bank of England was at 4 per cent; across the ditch the RBNZ was at 4.25 per cent and almost certainly headed higher with its first meeting back for the year next week.

Further, Greenwood noted, Lowe was the first to step back from 50-point hikes to just 25-pointers; and he did so, way back in October. The Fed only did it at the end of January, the BoE and the ECB are still doing 50-pointers, and we shall see what the RBNZ does next week.

RBA governor Philip Lowe. Picture: AAP Image/Lukas Coch

The reason is Lowe’s desperate attempt to keep on his self-described “narrow path” – I’d call it wimpish and dangerously softly-softly - to slowly bringing inflation back below the top of the RBA’s mandated 2-3 per cent range, without slowing the economy too much.

Lowe was at it again Wednesday and will presumably be repeating it Friday.

To paraphrase: we’ve got the lowest jobless rate in 50 years at 3.5 per cent, and I want to try to keep it as low as possible.

Now it would be great if somebody had a ‘magic wand’ that could be waved to deliver 3 per cent inflation and 3.5 per cent unemployment – but nobody does and certainly not Lowe.

Indeed, Lowe was seemingly immediately blown right off his ‘narrow path’ between his two Canberra appearances, with the ABS jobless numbers Thursday showing the January jobless rate kicking up to 3.7 per cent.

Now, let me stress for something like the 2113th time in near-50 years of commentary, that the monthly ABS jobs and jobless numbers are a total crock – made even more of a total crock by the Covid ‘disruptions’ of the past three years.

And this goes double – if you can double worthlessness - for the so-called “seasonally adjusted” numbers, the 3.7 per cent - around this Christmas-spending holiday-time of the year.

So we will have to see what sort of jobs and jobless numbers pop out of the ABS – and the generally more accurate Roy Morgan - in coming months; just as, in the opposite direction, we will have to see whether the apparent huge surge in jobs in the US in January was real or statistical fiction.

But it is worth noting, that the 3.7 per cent jobless figure as at January was higher than the RBA’s forecast of a 3.6 per cent jobless number at the end of June.

A forecast made just a week ago.

It’s bad enough – not walking the walk – that Lowe is happy that it will take two years, to mid-2025, to get inflation back to 3 per cent. Perhaps.

But what if the RBA falls off its ‘narrow path’ on both sides, so to speak – inflation staying too high and jobless rate surging through 4 per cent?