Opportunistic rises

While Reserve Bank governor Philip Lowe identified there were problems with the

RBA model, what he failed to point out was that inflation – the rise in cost of products

– was not due to an increase in the cost of production (John Hewson, “High prices to pay”, September 17-23). It’s about opportunistic corporate business decisions in the event of the market being damaged by war. The flow-on effect to all other products drives inflation. Sure, the pandemic damaged supply chains and the floods on the east coast were all indicators of potential inflation problems, which the RBA missed. The question is whether monetary policy is an adequate mechanism into the future when such circumstances have a higher probability of occurring. Perhaps a prohibitive 80 per cent super profits tax is the additional government tool to crush societal disruptive business decisions in future.

– Trevor Pratt, Eaglemont, Vic

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