RBA governor Philip Lowe will be asked to explain why he privately briefed elite bankers about the ninth consecutive rise in interest rates – during a week when he was too busy to make a speech to the public.
Dr Lowe will be appearing before parliamentary public hearings this week and a recent revelation about his lunch date is raising fresh questions about his performance and the bank’s relevance.
For the past five years Dr Lowe has given a speech about monetary policy after the central bank’s first meeting for the year, the AFR reported, but this year he declined citing scheduling pressures that soon lifted in time for a private lunch with traders from the big four banks.
House Economics Committee member Jerome Laxale told TND he would encourage Dr Lowe “to address the reports that he chose a cosy lunch over addressing the Australian public”.
“Given the gravity of the decisions has been making over the past six to 12 months and the impact they have on everyday Australians, it’s the norm to address the public and instead he went to a cosy industry insider lunch.”
The RBA denied Dr Lowe had said only what was contained in the statement issued after its board decided to increase rates by 25 basis points and warned further tightening of monetary policy was to come.
Held for bond traders from the big four banks, powerful players in a market directly affected by monetary policy, the lunch coincided with a “modest but noticeable” sell-off in futures contracts for government bonds, the AFR reported.
Previous RBA governors have communicated directly with market players, Treasurer Jim Chalmers said on Sunday, but he said the episode raised questions about how the bank communicated its decisions to Australians.
Markets were caught off-guard by the RBA’s gloomy statements earlier this month and last Friday the bank said it expected more Australians would become unemployed as the economy slows in response to rate rises.
Changes are potentially looming for the RBA at a time when the bank’s relevance has been increasingly questioned since Dr Lowe wrongly predicted rates would remain at an emergency setting just above zero until next year.
A review is also prompting fresh thinking about the bank, which has not been subject to the same degree of scrutiny as other public institutions.
During his last appearance before a hearing, Mr Laxale, the Labor MP for Bennelong, quizzed the RBA governor about why the bank did not account for the financial impact on renters and only mortgage holders when releasing decisions.
Dr Lowe suggested Australians’ choice of land on the east coast was a bigger determinant of housing costs than interest rates but the bank is not testing the relationship as rents hit record highs.
The landmark review, due next month, will look at the composition of the RBA’s board and its focus on keeping inflation within a 2 to 3 per cent range that critics say has inflicted too much financial pain on Australian households.
Dr Chalmers said on Sunday the review was about the “structures, processes and objectives” of the central bank, not “one person” or its independence from government.
Dr Lowe’s seven-year term is up for renewal in September and the Treasurer on Sunday did not seize an opportunity to publicly back him.
The RBA governor recently said he hoped to be reappointed.
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