The AFR says the economy is running at full throttle and beginning to overheat. Yesterdays editorial says:

Australia's economy is hard up against capacity constraints. There are bottlenecks in the labour market that have been bound to result in wages inflation. Global food and energy inflation has feed into higher costs.So what will the federal government do?

The call is that the Government must fix things. That is what it has been elected for. But what can the government do?

It cannot do anything with interest rates as that is now the task of the Reserve Bank. It cannot do anything about global energy prices. It can blame the Howard Government though. It does, and no doubt we will hear about the Coalition's negligence and failure to control inflation for years to come.

Hang a mo. Has not the Reserve Bank been rather slow to act? The signs of overheating were there during 2007, as were the signs of increasing household debt (mortgage and credit card). If the finger can be pointed at the RBA to "stomp on inflation", then that finger belongs to the federal government. It can hold the economic mandarins at the RBA responsible for getting inflation under control. The RBA needs to be held accountable.

Good question.