Waleed Aly has defended the Reserve Bank’s governor for his unrelenting rate hikes putting severe pressure on Aussie mortgage holders.
Dr Philip Lowe told a Senate hearing in Canberra on Wednesday this month’s ninth consecutive increase – taking the cash rate to a 10-year high of 3.35 per cent – would be far from the last, warning more pain was necessary to avoid a repeat of 1990 when RBA rates were at 17.5 per cent.
This is despite the central bank boss in 2021 suggesting the cash rate would remain at the near-record low of 0.20 per cent until 2024.
Throughout the hearing, Dr Lowe repeatedly said he cannot be held personally accountable for every decision the RBA board makes.
Aly – who is reported to be earning about $900,000 a year at Channel Ten – agreed, insisting that it’s incumbent on government to come up with other ways to stem rising inflation.
The Project panellist Waleed Aly (above) defended RBA Governor Philip Lowe’s rate hikes, saying ‘If you want to deal with inflation, you need to take money away from people’
‘It’s not on Philip Lowe to come up with other ideas, he has one thing he can do with inflation and that is raise interest rates – that’s that,’ he told the panel.
‘(Government) can do all sorts of things. They can make a new tax policy… If you want to deal with inflation, basically, you need to take money away from people.
‘That’s the unfortunate thing. No one enjoys that but it’s what you’ve got to do.
‘You can do that through tax, you can raise the GST (Good and Services Tax), you could do it with government spending.’
Aly pointed to Labor’s plans to make childcare more affordable among other welfare schemes and said ‘that’s going to make inflation worse’.
He explained that while hiking rates are typically thought of as the best way to reduce inflation, the practice doesn’t appear to be working in Australia’s current situation.
‘You can’t set it up where we ask monetary policy to solve all our problems, which means our only lever is to push rates up and then when he (Dr Lowe) does it, go ‘how dare you push interest rates up’,’ Aly said.
Dr Low was copped a grilling at the Senate hearing earlier today as he was probed about getting his predictions so wrong.
But he insisted more economic pain is necessary to avoid a repeat of 1990 when RBA rates topped at 17.5 per cent.
‘There is a risk that we have not yet done enough with interest rates and spending is more resilient and that inflation stays high,’ Dr Lowe told Senate on Wednesday.
‘If inflation stays high, it’s very damaging for the economy, it worsens income inequality, it makes it harder for businesses to plan, it erodes the value of people’s savings, it’s corrosive for the economy.’
RBA Governor Philip Lowe was grilled by Senate on Wednesday (above) following Australia’s ninth consecutive rate rise
Aussie were outraged to hear the Commonwealth Bank (above) has grown $5.216billion richer while loaners are going broke from its skyrocketing interest rates
Thousands of Australians who took out home loans on his advice are now suffering with many forced to pay hundreds more each month to keep up with spiralling interest repayments.
Average variable rate borrowers have already endured a 43 per cent increase in their monthly repayments during the past nine months and now fixed rate borrowers facing a 65 per cent surge in 2023.
Dr Lowe acknowledged it was ‘really, really hard for some people’ and said he’s 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 on top of inflation it means even higher interest rates and more unemployment.’
He decidedly warned government against intervening in the latest rate rise noting the ‘completely crazy’ move could lead to even higher prices and unemployment.
Further enraging Aussies, shortly before Wednesday’s hearing the Commonwealth Bank revealed its statutory net profit has increased when comparing the first fiscal halves of 2023 and 2022.
Struggling homeowners were furious to hear the bank has fatten its pockets by 10 per cent to $5.216billion with many believing the raise was funded by the same rising rates that are sending them broke.
Mr Lowe (above) told Senate he can’t be held personally accountable for the RBA board’s decisions and said he has received personal letters from struggling homeowners which he reads with a ‘very heavy hart’
The Commonwealth Bank, Australia’s biggest home lender, is expecting two more RBA rate hikes by April that would take the cash rate to 3.85 per cent.
NAB, Australia’s biggest business lender, on Tuesday adjusted their forecasts to have a 4.1 per cent cash rate by May, with chief economist Alan Oster admitting three more rate rises could cause a recession.
‘We still don’t expect a technical recession in Australia – but with rates rising above 4 per cent, it is becoming more of a possibility,’ he said.
Westpac and ANZ are expecting a 3.85 per cent cash rate by May.