Central Banks Confront New Reality of Economic Statecraft

Reserve Bank of Australia Governor Michele Bullock has highlighted a significant shift in the challenges facing central banks. Speaking at an event, Ms Bullock acknowledged that like her predecessors, she too faces a defining crisis - but this time it's global inflation driven by geopolitical conflicts and supply shocks. This wave of inflation is thousands of kilometres from Australia and no longer purely domestic economic concerns.

Michele Bullock's sentiment resonates with Michael Every, a global strategist at Rabobank. He believes central bankers are increasingly becoming military strategists, as understanding military strategies and their impact on global oil prices is now crucial for institutions like the RBA. Mr. Every points to Ms Bullock's observation that current supply disruptions stem from a fundamental shift in the global order.

This new reality is described by Michael Every as 'economic statecraft' and 'grand macro strategy', where nations pursue interests using economic, political, and military power. He argues this marks the end of 45 years of globalisation underpinned by US military might, which led to inequality and weakened industrial capacity.