Reserve Bank governor Philip Lowe has defended his right to privacy when justifying his attendance at a private lunch where he briefed bankers just two days after the central bank flagged more interest rate rises.
The meeting was hosted by investment bank Barrenjoey and took place on Thursday February 9, two days after the Reserve Bank (RBA) lifted interest rates for the ninth time and promised more, catching investors unaware.
Shortly after the meeting, bankers moved to correct their footing in the bond market, leading to a sell-off in bond futures contracts and a rise in bond yields.
When he appeared at Senate estimates on Wednesday, Lowe said the series of events were nothing more than a coincidence, insisting there was “nothing untoward” about his interactions with representatives of the big four banks.
It was “appropriate” he was there and he needs to “hear what financial markets say” to avoid living in a “bubble”. He then took aim at leaks to the financial press about the lunch, which he suggested undermines “confidence”.
“In general, and for many, many years, I have been able to have these and other meetings with the understanding of all participants that people in the meeting don’t run to the press straight afterwards,” he said.
“If you’re meeting with me, you want to have confidence that I’m not going to go to the press or tell other people what you’ve said, and I expect the same courtesy.”
The line of questioning was brought on by Liberal Senator Andrew Bragg on behalf of Labor MP Jerome Laxale, for whom Bragg said it was “an urgent issue”.
Laxale and others are sceptical of the nature of the meeting, as Lowe faces renewed criticism for the central bank’s opaque approach to monetary policy.
On Sunday, Treasurer Jim Chalmers said he thought “there’s a broader issue here” about how the RBA “communicates the context for its decisions”. The Labor government ordered a review of the bank when it took government, the findings of which will land next month.
“This is one of the things that I’ve been discussing with the RBA review panel — how they communicate their decisions and the context behind their decisions is one of the key focuses of that,” Chalmers told the ABC.
The review, Chalmers indicated, was likely to emerge as a referendum on whether or not Lowe would be offered another term as governor. There is an expectation in Canberra, however, that Lowe isn’t likely to last beyond September.
Four Labor MPs — Laxale, Rob Mitchell, Julian Hill and Graham Perrett — have grown increasingly critical of the RBA leadership after sustained rates tightening, as households face rising cost-of-living pain.
Greens Senator Nick McKim, a critic of Lowe who called for his resignation after last week’s rate rise, asked what measures were being taken to hear from “renters and mortgage holders” in pain as a result of interest rate rises.
“How do you make sure that you factor those matters into your decision-making at the appropriate level, compared to big business and banks who are just interested in making money?” McKim asked.
Lowe said it was a “very good question” and pointed to a recent meeting with the Australian Council of Social Service, but maintained that rising rates remained the best path towards tackling inflation and getting “on top of this”.
“It’s not a nice message, but that’s the reality we face and we have to face into that reality,” he said.
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