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Are there better ways to manage inflation?
Reserve Bank governor Philip Lowe says there probably are.
Last week, in one of his final public appearances as central bank governor, he said monetary policy was a very blunt instrument that spread pain unequally through the community.
He said under an alternative system, monetary authorities could work differently with government and Treasury to better coordinate their inflation-fighting policies, and we should think seriously about it over the longer-term.
"It's a big issue, and I was a bit disappointed that the RBA Review didn't tackle it," he told politicians.
So, what was he talking about?
New institutional arrangements? It's worth looking at, says Lowe
Dr Lowe's term as RBA governor ends next month.
He has spent more than 40 years as a central banker, having joined the bank in 1980 after finishing high school.
He's been with the bank through its entire modern era, having been there in the early 1990s when the bank asserted its "independence" from government and began to target inflation.
He's highly respected in central banking circles globally.
And last week, with his long career winding down, he shared his thoughts about the way we manage inflation.
Allegra Spender, a teal independent MP from Sydney, asked him if there was anything that could make the RBA a more effective economic institution.
She said the bank had obviously been subject to an external review recently, but was there anything else he'd like us to think about?
Here's what Dr Lowe had to say in response:
"Well, we've had this review, so we're now proceeding to implement the recommendations.
"[But] at a very high level, I still think there's worth giving thought to coordination between monetary and fiscal policy," he said.
Fiscal policy refers to the taxing and spending behaviour of governments (and Treasury officials).
"The reason that monetary policy has really been assigned to an independent central bank is it's very difficult for the political class to do what we're currently doing. That is, putting up interest rates," Dr Lowe said.
"People are hurting. It's very uncomfortable. And we're putting up interest rates. In parts of the community we're incredibly unpopular. I often read in the paper that I'm the most unpopular person in the country.
"It's much harder for the political class to be unpopular in the way the Reserve Bank and I am unpopular ... and that's largely why setting of interest rates and managing the inflation cycle has been assigned to an independent central bank who doesn't have to worry about being re-elected and being popular," he said.
He said many countries had adopted similar institutional arrangements, with independent inflation-targeting central banks, and it had "actually worked pretty well."
But that didn't mean things were perfect.
"I think from an overall economic outcomes [perspective], it would be better to at least think about whether this focus could be on monetary policy in managing the economic cycle and inflation and developing alternative institutional arrangements which could shield some of the political class from the pressure that I feel, and they could then use some of the instruments that they have at their disposal to help [with] managing the cycle," he said.
"Because monetary policy is blunt and we've talked about [how] it's uneven, and some people think that it's unfair, and I understand where people are coming from.
"In principle, I think there is a better way of doing it, but it's hard because of the governance issues and the fact that you can be unpopular, very unpopular, when constraining the economy.
"It's a big issue, and I was a bit disappointed that the RBA Review didn't tackle it," he finished.
Monetary policy has significant distributional impacts
Ms Spender then pushed him further.
She asked Dr Lowe if he could think of any examples from overseas where fiscal and monetary authorities worked in a more coordinated fashion, in ways that politicians were comfortable with because it didn't impact their electoral popularity.
Dr Lowe said in some Asian countries where the nature of politics and governance arrangements were different, there was closer cooperation between fiscal authorities and the central bank.
"But it would require a substantially different governance and ... policy framework [to work in Australia]," he said.
"So, it's not easy, and no one has managed to do it, but I think it's still worth looking at over time because monetary policy is effective but it also has quite significant distributional effects."
By "distributional effects," he was referring to the clearly uneven ways in which income and wealth are redistributed from some sections of the community to others when interest rates are shifted around, under the current system.
"It's tough," he said.
"Some people in the community are finding things really difficult from higher interest rates, and other people are benefiting from it."
And that's where he left it.
He didn't elaborate on the point again, and he didn't name any countries that Australia might be able to pinch inflation-fighting ideas from.
But it was still significant.
Dr Lowe isn't the type of economist who spent a few years at Treasury as a junior fetching coffees for senior colleagues, and who then went on to promote himself as an expert on monetary policy.
He's reached the rarefied height of central bank governor.
Only four people have been governor of the Reserve Bank in the inflation-targeting era, and Lowe is the only one who's had to deal with a significant outbreak of inflation under the current regime, and in an environment where the signs of climate breakdown are all around us, coupled with rising inequality.
We may hear more from him on this point when he speaks to the Anika Foundation on September 7 in Sydney, in a speech he's titled "Some final remarks."
But after that, he will hand his reins to Michele Bullock to lead the Reserve Bank for the next seven years, and to deal with these questions herself.
That will be the start of a new, and critical, period for everyone.