RBA Governor Apologises To Homeowners For Offered Rate Guidance

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Philip Lowe, governor of the Reserve Bank of Australia (RBA), appeared before lawmakers to address the overwhelming issue raised by his guidance concerning interest rates last year. Lowe apologises for his call, which is now negatively impacting many Australians.

Last year, Lowe and the RBA board stated that the bank was likely to hold the cash rate steady at record low rates and will continue to do so until the inflation is within the two to three per cent target range. Lowe also noted that this scenario will not be met until 2024.

However, the cash rate rapidly increased from 0.1 per cent to 2.85 per cent starting May 2022 as the economy recovered from the pandemic lockdowns quicker than expected, pushing inflation to its highest in 32 years.

Part of Lowe’s comment was, “We will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. The central scenario for the economy is that this condition will not be met before 2024. Meeting this condition will require the labour market to be tight enough to generate wage growth that is materially higher than it is currently.”

Lowe defended himself during the hearing, claiming that when he made the comments because, during that time, the economy was facing ‘dark times’ and he didn’t foresee the inflation picking up quickly.

He further added, “I’m sorry if people listened to what we’d said and acted on what we’d said and now regret what they’ve done. I’m sorry that happened. At the time, we thought it was the right thing to do, and I think, looking back, we would have chosen a different language.”

The governor further noted that he thought his delivery of the message, along with its caveats, was clear. Unfortunately, it wasn’t. But despite this, Prime Minister Anthony Albanese told reporters he was still confident in Lowe’s capacity as the RBA governor.

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