The Greens are calling for the resignation of the head of the Reserve Bank, Phillip Lowe, after the recent increase in official interest rates, and last Tuesday's decision brought interest rates to 2.35%. And yes it may seem low compared to previous decades, the cost of living — which is on the rise — creates a difficult economic climate for many families with mortgages.
Over the past five months the Reserve has raised interest rates every month.
In today's speech on Australia's economic outlook, the Governor of the Reserve Bank, Phillip Lowe, defended the Reserve's decisions on interest rate increases saying that the purpose of the increases is twofold:
1) to ensure that upward inflationary trendsare temporary and
2) to achieve a more sustainable balance in supply and demand in the Australian economy
Phillip Lowe stressed that price stability is essential for a robust economy as well as keeping unemployment low. Lowe closed his speech with the prediction that there will be more increases in interest rates in the coming months. He admitted that interest rates have risen very quickly in recent months, stressing that “how much longer interest rates need to be raised and how quickly we will get there depends on the economic data we get, on the image of the economy — in progress — and on the labour market”.
The Reserve Bank, for the past three decades, has been aiming for inflation at a level of between 2 and 3 per cent. Mr Lowe said the Reserve was surprised by the high inflation that pushed the inflation rate to 6.1%.
The Greens have been asking for his resignation due to the rate rises and the pressure that puts to Australians in combination with the high cost of living.
Lowe argued that he never said interest rates would not rise until 2024 and that he does not intend to resign.
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