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RBA 'ignores' full employment mandate, Guardian columnist argues

Greg Jericho questions why turbocharged petrol prices should put Australian jobs on the line

By LineZotpaper
Published
Read Time1 min
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Interest rates are up again and recession talk is building, but Guardian Australia columnist Greg Jericho argues the Reserve Bank of Australia is ignoring half of its formal mandate. In a column published this week, he says the RBA's enabling legislation requires it to pursue both price stability and full employment, yet in practice the 'full employment' aspect appears to be overlooked.

Writing for Guardian Australia, Greg Jericho opens with a familiar scene: interest rates up again and talk of a recession if needed. He points to the RBA's enacting legislation, which gives the central bank a dual mandate covering 'price stability' and 'the maintenance of full employment in Australia.'

In reality, Jericho argues, the RBA seems to ignore the full employment side of that mandate altogether. With petrol prices described as 'turbocharged' and helping drive inflation, he questions why the unemployed should be the ones on the line.

The column's subheading is pointed: avoiding a rise in unemployment is important to the RBA, 'but apparently not a dealbreaker.'

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Analysis

Why This Matters

  • The RBA's interpretation of its mandate directly affects whether Australians keep their jobs when inflation rises.
  • If the bank treats full employment as secondary, borrowers and workers bear the cost of rate rises.
  • With recession talk returning, the balance between the RBA's two goals is a live policy question.

Background

The Reserve Bank operates under legislation that directs it to pursue price stability and full employment together. Greg Jericho, writing for Guardian Australia, argues the bank has in practice prioritised the former. His column appears as interest rates rise again and recession talk returns. The immediate driver he cites is turbocharged petrol prices, which raises the question of why unemployment should pay the price.

Key Perspectives

The Reserve Bank: Its rate decisions indicate a firm focus on bringing inflation down, even as recession talk grows. Workers and jobseekers: They stand to lose most if the RBA's tightening pushes unemployment higher. Greg Jericho and like-minded critics: They argue that when inflation is driven by external factors such as petrol prices, making the unemployed the line of defence is the wrong trade-off.

What to Watch

  • The RBA's next rate decision and the language it uses about its full employment objective.
  • Monthly inflation and employment data that will show whether the tightening is costing jobs.
  • Whether petrol prices ease, which would take pressure off both inflation and the case for further rate rises.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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