Dr Phil Lowe and his Reserve Bank board have to make a big decision today and what they come up with could prove to be the right play to bring inflation down to acceptable levels or create a recession we didn’t have to have.

This is a tough job but someone has to do it. In fact, a recession is an effective way to kill inflation but it will also exterminate jobs, profits, businesses, peoples’ homes, their nest eggs and their aspirations, while breaking up families.

The decision made at these first Tuesdays of the month by the RBA have wide-ranging implications, so they can’t just keep raising interest rates willy-nilly until they see a big collapse in the inflation rate.

In October we saw that inflation surprised on the lower-than-expected side and the stock market loved it. This is how the ABC headlined it: “Inflation surprisingly eased last month as supply bottlenecks cleared.”

The clearing of bottlenecks is an important back story to this CPI fall because our economy is being torched by higher interest rate rises because the RBA can’t KO cost-push inflation. In fact, its rate rises add to inflation, as landlords raise rents and unions demand higher wages to make up for the seven rate rises since May, which has taken the cash rate from 0.1% to 2.85%.

This is a big jump in a short time. That’s why the RBA has to be careful, given that monetary or interest rate policy works with a lag of six-12 months. Of course, some of it works quicker than 12 months but for example, some businesses might not raise wages until a year has passed and a union fight has proceeded it.

Some rents could be locked into an annual contract so the higher rent takes time to happen, but when it does, the tenants start spending less, explaining why the rate rise takes time to hit consumers and businesses.

Ahead of the worst recession in living memory, Paul Keating warned us all beforehand that he could “burn” inflation out of the place but it would drop us into recession. He later referred to that recession, which took the jobless rate over 10%, as “the recession we had to have”.

But this was debatable. On one hand, the RBA (which Keating in his own words had “in his hip pocket”) clearly raised interest rates too high, with home loan rates hitting 17%! On the other hand, inflation and the mentality that goes with it did need something confronting to change our attitude to price and wage rises.

That said, recession is a big price to pay by the losers in this policy play — the unemployed, the bankrupt, the mortgagees and the eventual homeless — who pay the price for runaway inflation and inept interest rate decisions.

Today’s interest rate decision needs to be driven by a great perception on what’s going on in the economy now and what will happen in the future. Dr Phil and his board must understand the threat and come up with the right strategy to beat it, without cooking the economy.

As my old footie coach would scream at us: “No guts, no glory!” I was the captain at the time and one day I did say to Wally that I appreciated the sentiment of his screaming and it was an important part of winning, but I also argued that we needed tactics and strategy as well based on understanding the opposition we faced.

He thanked me for my views and told me to get back on the park and do my job! Guts took us to the semi-finals that year but with a more tactical coach we might have won t