The governor of the Reserve Bank Phil Lowe will front a public grilling for the first time since the RBA raised interest rates for a ninth consecutive time.
Last week, the central bank announced a .25 percentage points, raising the official cash rate to 3.35 per cent – up from 0.1 per cent just a year ago.
The RBA has also indicated there are more hikes to come, as it uses interest rates as its main weapon in its battle to lower inflation which is sitting at a 32-year high of 7.8 per cent.
Dr Lowe is facing growing criticism for the rate rises which have put extraordinary pressure on households, with more pain to come.
More than 800,000 record-low fix-rate mortgages taken out during the Covid pandemic are set to end this year, and when they reset, the homeowners behind them will face much larger interest repayments.
Politicians have been openly canvassing Dr Lowe needs to go.
On Wednesday, he is expected to be probed over the central bank’s plans to deliver further interest rate rises and the impact of nine consecutive hikes since May.
One of the governor’s most vocal critics, Senator Nick McKim who is on the senate economics committee, said Dr Lowe should not be able to skirt accountability just because the bank is independent of government.
“Dr Lowe will need to explain why it is that he is punishing renters and mortgage holders for an inflation problem that the RBA itself has confirmed is primarily a result of supply side issues,” the Greens treasury spokesman told NCA NewsWire on Monday.
“At every step of the way, his decisions have smashed renters and mortgage holders, worsening economic inequality and boosting the profit margins of big banks and the wealth of the already wealthy.”
NAB economist Taylor Nugent said the bank’s “hawkish” statement of monetary policy, released last week, was sure to be on the agenda.
“With heightened press coverage of Lowe’s recent approach to communication that is sure to be a focus of questioning,” he said.
Dr Lowe previously issued an apology in November for suggesting that the central bank’s cash rate would stay at 0.2 per cent until 2024, when instead it started rising in May 2022.
His seven-year term expires in September this year. The federal government last year ordered a review of the RBA, due mid-year.
Treasurer Jim Chalmers has also ordered a report from an independent panel to review the central bank’s performance. It is set to hand back its report by March 31.
Wednesday’s 90-minute session is the first of two parliamentary hearings the RBA boss will face in federal parliament this week.
On Friday, he’ll front up again for questioning by the House of Representatives economics committee.
Wednesday’s session starts at 11.15am.
Story Credit: news.com.au