Australia: RBA and Government confirm inflation target

Australia confirms its flexible inflation target in the range 2-3%. In a joint statement, the Reserve Bank of Australia and the Australian Government reaffirmed the view that the flexible inflation target represents the right way to achieve price stability in the medium term,  Treasurer Scott Morrison said in a statement. The stance comes in response into the debate on the correctness of this objective, in view of the sharp slowdown in inflation.

“Both the Reserve Bank and the government agree that a flexible medium-term inflation target is the appropriate framework for achieving medium-term price stability,” read the conduct statement. 

Yesterday Philip Lowe took office as new governor of the Reserve Bank of Australia to replace Glenn Stevens, who retired after ten years as head of the central Canberra.

"If, as expected, he enters into the same agreement as his predecessors then the incoming governor will be setting himself up for a longer period of disappointment," said Bill Evans, chief economist at Westpac Banking Corp in Sydney. "The risk with adopting too high an inflation target is that central banks are forced to exacerbate imbalances in asset markets."