Rallying for change in the banking industry

It would seem support is rallying for change in the banking industry, see Christopher Joye today in Business Spectator:

Here I dare anyone to risk Rory’s (Robertson) wrath by asking him whether the RBA has the right to target asset prices (yes, not just CPI), as appears to be their latest want, despite the Bank’s chequered performance in every major crisis it has confronted: take the 1987 crash—by keeping rates too low for too long in response to Black Tuesday, they allowed inflation to run amok (headline CPI averaged c. 7.3 per cent between Dec ’87 and Mar ’89 yet mortgage rates remained unchanged between Sep ’87 and Feb ’89); recall the 1990-91 recession we had, care of the RBA, to have—well, mortgage rates were eventually jacked up in response to burgeoning inflation in the late ‘80s, and rose to an incredible 17 per cent by Jan ‘90.

Yet in spite of the onset of the worst recession since the 1930s they were stunningly slow to come down, averaging 13.7 per cent between 1990 and 1992 while unemployment increased inexorably to 11 per cent; finally consider what transpired during the 2007-2008 global financial crisis—yes, this was the only central bank in the developed world that hit its unassuming households with 6-7 official and “de-facto” rate hikes in the midst of the crisis because of misplaced concerns about inflation. And when mortgage rates peaked at 9.6 per cent in August ‘08 and the RBA was forced to commence an embarrassing 180 degrees turn in September, a compliant commentariat had the temerity to describe them as “ahead of the curve”- give me a break.

If these guys can’t accurately forecast inflation, how on earth are they going to target much more volatile asset prices? Governor Kohn certainly seems to agree).