The Reserve Bank’s outgoing governor Philip Lowe has unleased on his critics and the media – claiming five myths were circulating about him that were untrue.
Dr Lowe used his last high-profile public appearance to suggest his prediction in 2021 – that interest rates would stay on hold until 2024 ‘at the earliest’ – was a forecast and not a promise.
‘In addition to these points, there are many other points that have been attributed to me, including: a that interest rates would not go up until 2024,’ he told the Anika Foundation in Sydney.
He was defensive even though he made repeated remarks, two years ago, suggesting the cash rate would stay on hold at a record-low of 0.1 per cent until 2024.
‘The board will not increase the cash rate until actual inflation is sustainably within the two to three per cent target range,’ Dr Lowe said in March 2021 in a monthly statement.
‘The board does not expect these conditions to be met until 2024 at the earliest.’
That sentiment was repeated in April, May and June of 2021, shortly before official data showed inflation rising to 3.8 per cent, a level above the 2 to 3 per cent target.
Despite Dr Lowe’s assurances, interest rates have gone up 12 times since May 2022 to an 11-year high of 4.1 per cent, marking the most aggressive pace of monetary policy tightening since 1989.
The Reserve Bank’s outgoing governor Philip Lowe has unleased on his critics claiming five myths circulating about him that were untrue
Dr Lowe on Thursday acknowledged some borrowers got themselves into debt in 2021, as house prices were surging, and are now facing much higher monthly mortgage repayments.
‘As you know, interest rates started being increased in May 2022 and there has been much criticism since, especially by those who borrowed during the pandemic based on our guidance,’ he said.
Monthly repayments on a variable rate mortgage have surged by 63 per cent in little more than a year, with a borrower servicing an average, $600,000 loan paying $17,556 more a year than they did in early 2022.
Dr Lowe on Thursday also refuted suggesting young people get a flatmate after making comments about the rental crisis during a Budget estimates hearing.
Listing one of the myths, he said: ‘Everybody needs to get a flatmate; people need to work more hours to make ends meet; and young adults should stay at home because of the rental crisis.’
On May 31, Dr Lowe told a Senate estimates hearing: ‘As rents go up, people decide not to move out of home, or you don’t have that home office, you get a flatmate,’ he said.
‘Higher prices do lead people to economise on housing …. Kids don’t move out of home because the rent is too expensive, so you decide to get a flatmate or a housemate because that’s the price mechanism at work.’
He also had a go at Nine’s A Current Affair for showing footage of him walking to a podium at a Morgan Stanley event to Justin Timberlake’s Can’t Stop the Feeling.
‘Yet, I did not make these points. Nor did I choose Justin Timberlake‘s to accompany me as I walked a recent podium.’
The ABC’s Media Watch program in June defended Dr Lowe against that Steve Marshall’s story, where fellow reporter Simon Bouda chased after him and asked questions on the street.
Dr Lowe also had a go at the media for being sensationalist and fuelling personal attacks against him.
‘My view is that we will get better outcomes if the public square is filled with facts and nuanced and informed debate, rather than vitriol, personal attacks and clickbait,’ he said.
‘As a society, we have got work to do here.
‘My experience here highlights the difficulties of communicating in the social media and digital age.
‘Despite these difficulties, I have always felt a responsibility to explain complex ideas, and the trade-offs and uncertainties we face.
‘I know that some of my explanations have missed the mark. But the media has a responsibility too.’
While the media was promised questions, time ran out at the one-hour event before journalists could ask questions.
Dr Lowe’s seven-year is ending on September 17, with his deputy Michele Bullock replacing him in 11 days’ time.
Treasurer Jim Chalmers declined to extend his term to a decade – a courtesy given to his predecessors Ian Macfarlane and Glenn Stevens – after a review into the RBA raised concerns about how monetary policy was communicated.