I know it's hard, but it could be harder: Lowe


Appearing at a Senate hearing today, Reserve Bank of Australia (RBA) governor Philip Lowe says people have forgotten how corrosive inflation is.

The governor explained the RBA has one priority and that is to bring inflation down.

"Inflation at the moment is 7.8% and way too high, it needs to come down," he says.

rba governor philip lowe defends interest rate hikes

Lowe added it's been 30 years since high inflation "eroded savings", worsened inequality and "hurt the poor."

"Our job as the country's central bank is to make sure that doesn't happen again," he says.

"Part of the way we do that is to remind people of the dangers of it and say, 'Well if we return to that world, you'll have all these nasties again'.

"I know it's really hard for people to have to pay more on their mortgages, but it'll be harder if inflation gets too high and stays too high, meaning even higher interest rates and lower employment."

However, not everyone was convinced. Senator McKim fired back, saying Australians took on mass debt following Lowe's recommendation that interest rates were unlikely to rise until 2024.

McKim highlighted that Lowe also admitted to overdoing monetary stimulus during the pandemic and says rents weren't likely to be significantly impacted by interest rate increases.

"You seem prepared to smash Australia into a recession by trying to squash demand in response to inflation that has, on the RBA's own analysis, been predominantly a result of supply-side factors," he says.

"Can you explain to the renters and mortgage holders of Australia, why you still deserve to hold your job?"

Lowe says he fully intends to serve out his seven-year term.

"The decisions that the Reserve Bank made are made by a board of nine people. It's not just me, and we make them collectively and collaboratively," he says.

"We are trying to navigate a neuropathy. We want to get inflation down because it's dangerous, it's corrosive, it hurts people, it damages income inequality. And if it stays high, it leads to higher interest rates and, and more unemployment."

This article first appeared on Financial Standard

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Cassandra Baldini was a senior journalist at Financial Standard from June 2022 to December 2023. Prior to this, she was a reporter at the Daily Telegraph's digital subsidiary News Local covering court, crime and community news. She held various roles at Bloomberg in the London newsroom, and worked at Vanguard and Sony. She has a Bachelor's degree in Journalism from Macleay.
carey badoino
February 15, 2023 4.00pm

The current global inflation issue is predominantly due to the 19 trillion printed by central banks and given away during Covid.

Australia alone printed 400 billion, 188 billion for the TFF, and over 200 billion handed out by the previous government who seem to be getting away Scott free for their part.

Global currencies have been meaningfully devalued and prices are now resetting accordingly.