Reserve Bank Governor Philip Lowe says blame for inflation woes should be shared: analysis
“I read these letters and heard these stories with a very heavy heart. I find it, you know, personally — I find it disturbing.
“People are really suffering, I understand that, but I also understand that if we don’t get inflation under control, it means even higher interest rates and more unemployment.”
But, as Lowe pointed out, the pain these letter writers are suffering would be nothing compared to the hurt caused by higher inflation, which would force the RBA to raise rates even more.
Former Federal Reserve Chairman Alan Greenspan once said that when his message seems particularly clear, then “you probably misunderstood what I said.”Credit:AP
The governor also made sure the assembled senators knew he wasn’t the only one who decided to raise interest rates.
Lowe chairs a nine-member board that includes his deputy Michele Bullock, Treasury Secretary Steven Kennedy and six others appointed by the Treasurer.
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The governor noted that every month he circles the board members to get their opinion on the next step.
“Sometimes the fact that I’m being asked to do everything is a bit unfair because it’s the board, there are nine of us including Michele that make those decisions,” he said.
For a man who can move financial markets with few words, the decision to mention the board more than 30 times was no coincidence. It was a more than gentle reminder that an entire institution – including several people appointed by the previous government – is backing the current rate hike.
In Canberra, there’s a good chance Lowe will extend his seven-year term when his appointment officially ends in early September.
Credit:Matt Golding
But the tenures of two board members (base salary of $77,600 a year), Mark Barnaba and Wendy Craik, end before Lowe. The pair were on the board well before COVID and were there when the bank misjudged the risk of inflation both before the pandemic and over the past 12 months.
The Senate hearing is the first of two Lowe has in the Bundestag this week. He will appear before the House Committee on Economic Affairs on Friday.
That committee, which for the first time includes three trained economists, is likely to put the governor through a tougher test.
https://www.smh.com.au/politics/federal/people-are-really-hurting-i-understand-that-but-lowe-wants-to-share-the-blame-for-rate-rise-woes-20230215-p5ckr2.html?ref=rss&utm_medium=rss&utm_source=rss_politics_federal Reserve Bank Governor Philip Lowe says blame for inflation woes should be shared: analysis
