Waleed Aly has defended the Reserve Bank governor over his relentless rate hikes that have put severe pressure on Australian mortgage holders.
Dr. Philip Lowe told a Senate hearing in Canberra on Wednesday that this month’s ninth consecutive increase – taking cash rates to a 10-year high of 3.35 per cent – would be far from the last, warning that more pain was needed to avoid a repeat of 1990. when RBA rates were 17.5 percent.
This is despite the central bank boss suggesting in 2021 that cash rates would remain at the near-record low of 0.20 percent through 2024.
During the hearing, Dr. Lowe said repeatedly that he cannot be held personally responsible for any decision the RBA board makes.
Aly – who reportedly earns around $900,000 a year at Channel Ten – agreed, stressing that it is the government’s job to come up with other ways to combat rising inflation.
The Project panelist Waleed Aly (above) defended RBA Governor Philip Lowe’s rate hikes, saying ‘If you want to deal with inflation you have to take money away from people’
“It’s not for Philip Lowe to come up with other ideas, he’s got one thing he can do with inflation and that’s raise interest rates — that’s that,” he told the panel.
‘(Government) can do anything. They can make a new tax policy… If you want to tackle inflation, you basically have to deprive people of money.
‘That’s the annoying thing. Nobody likes that, but it’s what you have to do.
“You could do that through taxes, you could raise the GST (Good and Services Tax), you could do it through government spending.”
Aly pointed to Labour’s plans to make childcare more affordable alongside other social services, saying ‘that will exacerbate inflation’.
He explained that while rate increases are generally seen as the best way to reduce inflation, the practice doesn’t seem to work in Australia’s current situation.
“You can’t set it up where we’re asking monetary policy to solve all our problems, which means our only leverage is to raise rates and if he (Dr. Lowe) does it, say ‘how dare you raise interest rates,” said Alie.
Dr. Low was caught earlier today at the Senate hearing when asked if he got his predictions so wrong.
But he insisted more economic pain is needed to avoid a repeat of 1990, when RBA rates hit 17.5 percent.
“The risk is that we haven’t done enough on interest rates yet and that spending is more resilient and inflation remains high,” Dr. Lowe told the Senate on Wednesday.
“If inflation remains high, it is very damaging to the economy, it exacerbates income inequality, it makes it harder for companies to make plans, it erodes the value of people’s savings, it undermines the economy.”
RBA Governor Philip Lowe was challenged by the Senate on Wednesday (above) after Australia’s ninth consecutive rate hike
Australians were outraged to learn Commonwealth Bank (above) has become $5.216 billion richer as borrowers are driven bankrupt by skyrocketing interest rates
Thousands of Australians who took out home loans on his advice are now suffering and many have to pay hundreds more each month to keep up with rising interest payments.
Average variable-rate borrowers have already endured a 43 percent increase in their monthly repayments in the past nine months, and now fixed-rate borrowers face a 65 percent increase in 2023.
Dr. Lowe acknowledged it was “very, very hard for some people” and said he has received personal letters from Aussies drowning in bills.
“I read those letters and hear those stories with a very heavy heart,” he said.
‘I find it disturbing. People are really hurting, I understand that, but I also understand that if we don’t get out of inflation, that means even higher interest rates and more unemployment.’
He firmly warned the government not to intervene in the latest rate hike, noting that the “completely crazy” move could lead to even higher prices and unemployment.
Even more irate Aussies, shortly before Wednesday’s hearing, the Commonwealth Bank revealed that its statutory net profit increased when comparing the first fiscal halves of 2023 and 2022.
Struggling homeowners were outraged to learn that the bank had fattened its pockets by 10 percent to $5.216 billion, with many believing the increase was funded by the same rising rates that bankrupted them.
Mr Lowe (above) told the Senate he cannot be held personally responsible for the decisions of the RBA board and said he has received private letters from struggling homeowners that he reads with a ‘very heavy heart’
The Commonwealth Bank, Australia’s largest home lender, expects two more RBA rate hikes by April, bringing the cash rate to 3.85 percent.
NAB, Australia’s largest corporate lender, on Tuesday adjusted their forecasts to have a cash rate of 4.1 percent by May, with chief economist Alan Oster admitting three more rate hikes could trigger a recession.
“We still don’t expect a technical recession in Australia, but with rates rising above 4 percent, it becomes more of a possibility,” he said.
Westpac and ANZ expect a cash rate of 3.85 percent in May.