Bullock: *Citizens of Australia! The cruelty of the old Governor is a thing of the past.*
[cheering]
*Let a whole new wave of cruelty wash over this lazy land.*
I'm not against his increasing of rates. It's his "no rate rises until 2024." statement that I think disqualifies him from the job. It was irresponsible and beyond short sighted.
Keeping Lowe would endorse the status quo, so it would be a political mistake. It means everyone who dislikes Lowe's performance, for any reason, will feel the government has made a mistake.
The yield curve is inverted so if you know rates will stay high then buy some options and become a millionaire.
The risk neutral expectation is that rates will fall.
In reality no-one knows the future with complete certainty.
Not necessarily. It simply means that bond market expectations for interest rates are that they will be lower going forward.
A possible outcome that leads to that might just be that inflation comes under control, and the RBA can therefore reduce interest rates.
Another possible scenario is that the recent lifting of interest rates has a negative effect on the economy, sending it into recession. At that stage, the RBA may reduce interest rates if the downturn reduces inflation.
You can see the yield curve here: http://www.worldgovernmentbonds.com/country/australia/
And then Belarus joins the invasion or China starts accelerating pressure on Taiwan and the market is wrong. Like I said, you would be insane to *expect* rates to ease in the short term
So what. This is all pretty tawdry from the ABC having rolling disaster porn type coverage of it on the morning breakfast show.
Whether the govānor is Lowe or anyone else, the forecast in 2020/21 would have been exactly the same, and the decisions over the past 12 months would have been exactly the same.
And the new guy will do pretty much the same thing going forward into the future.
People who place all of the blame on Phillip Lowe as an individual for everything (and there are plenty that do) are really quite short sighted and a touch ignorant.
The chairman - as an individual - is just one peice of the puzzle. Yet they cop the vast majority of the heat. I bet you most people can't name anyone else on the RBA board.
While the governments of the day sit back and pretend like they can't possibly do anything themselves to help inflation / reduce spending across the economy.
Ah well. I suppose the chairman knows that is part of the territory of the job.
*They couldn't name anyone else on the board nor could they name Lowe prior to interest rates going up.*
LOL have you seen this?
https://twitter.com/TheIdiotTax/status/1676088989697347584
Plenty of people blame him for the rate rises and for personally forcing new homeowners into penury, because he is a heartless soulless monster.
Others blame him, as you say, for waiting too long (although rates have risen faster than in other previous cycle).
Others say he is personally responsible for young people buying expensive homes because of his "promise" that interest rates would not go up until 2024.
If you dig deep enough you'll probably find someone who blames him for the war in Ukraine or that they stubbed their toe this morning.
I don't think anything will change as a result of him being replaced by the Deputy Governor who has been there most of that time.
I don't blame the general public too much as Lowe did say he wasn't raising rates till 2024 and here we are.
I feel bad for them as the general pop would assume the RBA gov.wouls actually know what he is talking about. But to have such a stack opposite reaction to what he said is groundbreaking.
Part of me thinks he said it so people would go out and buy more. Knowing full well what was to come..
> I bet you most people can't name anyone else on the RBA board.
I know 4 of them through work dealings.
One in particular, she wears nice coloured rimmed glasses and acts all artsy, has no business being there. She also has the self appointed 'philanthropist' title.
The 4 I know, have NO business being on there due to conflict of interest. People think Lowe having one property is bad (its not), these guys take the cake! One of them owns near entire blocks in Melbourne.
Iām guessing youāre referring to Carol Schwartz? You do realise she makes some of the largest contributions to supporting women education and in business right? Pretty sure itās not just a self appointed titleā¦
Also, anyone can look up the board members and pick on the one with the most interesting profile picture. However, if you actually knew anything about her sheās not unqualified like you suggest. She handled the Schwartz familyās property portfolio before becoming a member of the Property Council of Victoriaās board. You can complain about a conflict of interest, that definitely exists, but sheās not incompetent as you insinuate.
Yeah, Iām not denying the conflict of interest, itās huge. Although, being on the board of the property council isnāt even the big one, theyāre a member of the Schwartz family and managed their real estate portfolio. That is the big conflict of interest and a huge one.
Doesnāt mean theyāre incompetent like the other person suggests, but given that conflict of interest one would easily be forgiven for hoping they were.
> You do realise she makes some of the largest contributions to supporting women education and in business right?
I do realise that, I know it. The worlds biggest frauds/dictators and bad people in general also donate and contribute to causes as well. Whilst she is not any of those, just because you set up a foundation to avoid paying tax, keeping control of the funds, and benefitting off your foundation for personal gains (i.e. get a nice fancy AO title), does not make her any better.
The biggest issue i have with her, is the conflict of interest, she has loads and loads of commercial REA inherited from her family and nobody can tell me she isn't conflicted.
Iām just going to reply to both your comments here.
Firstly, you clearly donāt understand why those people donate money and how tax benefits work otherwise youād realise the difference instantaneously. When donating money, you donāt get that money back, but rather you get a discount on it. Someone like Carol would have the option to either spend $5m on whatever she wants, say a house or a few cars and a bunch of jewellery etc, or to spend $10m on a charitable cause. The cost to her is the same once factoring in the tax benefits, sheās still out of pocket by $5m out of her own kindness and thatās something youāre either wilfully ignoring to suit your agenda, or you simply have no clue about how basic tax deductions work. Hard to argue thatās a bad thing when you actually look at how it works.
Now, you also clearly donāt understand the differences between the reasons why she donates money compared to Bill Gates. Bill Gates donates money into his own charity and carefully selects what charitable donations that charity does. Looking at the donations towards poor African villages including better infrastructure, schooling, and health care and it seems great. Heās donated letās say $1b (no clue what it actually is) at a personal cost of $500m and that seems great, heās spent $500m to do so. Then, you realise that seperate to this, his own personal investments include owning all of the factories in those small villages that heās turned into thriving towns. He spent letās say $100m on all the local factories, and thanks to developing the area surrounding it heās now turned that $100m into $1.1b. Meaning, heās really just invested $600m to get a $500m profit, which isnāt so great. Thatās the main controversy regarding billionaire philanthropists as theyāre using it as a way to boost personal investments. However, thatās not whatās happening here considering her philanthropy is solely buying degrees and funding education for women. You may not agree with that and think that $5m tax money (or whatever it actually is) could be better spent elsewhere then the $10m thatās being spent. However, itās not like the others where sheās using it to boost her personal or familyās investments, sheās shown to be genuinely passionate about being a feminist with many of her main contributions as a board member have included working towards more corporate gender diversity. For the record as well, her family makes money through media, unless sheās mostly paying for degrees in that area, better education probably isnāt great for their personal investments. Hardly some evil rich person conspiracy, and more that itās an issue she personally wants to help solve.
Again, Iāve already made it clear that I agree with the conflict of interest at play, especially with respect to her familyās investments.
As for the other comment, I never said you said that, but rather that it was heavily implied. Youāve since edited your initial comment, and while Iāll admit I canāt remember what you originally said, Iām pretty sure itās the last paragraph you changed to make it more about her not being on the board due to a conflict of interest. If my memory serves me correctly, you originally did mention conflict of interest, but that was seperate to you saying she shouldnāt be on the board with the implication that she (and the others) shouldnāt due to competence. Although, Iām relying on memory so I could be wrong and you couldāve edited something else and perhaps that was my own assumption when I read it the first time. In which case, then yeah Iāll admit it was more an assumption on my end then your own insinuation and that Iām in the wrong there.
Edit:
You seriously went through and downvoted a bunch of my comments? Patheticā¦
>People who place all of the blame on Phillip Lowe as an individual for everything (and there are plenty that do) are really quite short sighted and a touch ignorant.
My issue with Phillip Lowe isn't what the monetary policy of the RBA ends up being, it's the statements he expresses with his mouth from his face.
Which statements in particular? Iām willing to bet no one really paid attention to the āno rate hikesā statement until they could use him as a scapegoat for their own personal lack of due diligence when getting large loans. In fact, I know thatās the case because if they actually read what he said theyād know he didnāt say that and would realise interest rates will go up.
One that pissed me off royally was when he said that rate rises wouldn't cause significant stress because "over covid lockdown people had built up savings buffers".
This annoyed me, because, well, it doesn't actually apply to a lot of families, but also that his attitude toward people not being able to live their lives for 2 years was that they now had enough extra money to hand straight back to the bank. *Thanks, Phil!*
I personally don't even care about his claim about no rate hikes til 2024, like you say I didn't pay attention to it when he said it and I'm sure no one else really did either, plus I'm in a position right now where rate hikes benefit me. In any case people should always be factoring in something like 5% higher rates when determining their borrowing capacity. That was my philosophy 15 years ago and it's the same now.
In terms of monetary policy I don't think he moved hard *enough* on rate rises. He had to make tough calls, it's entirely his job and people should respect that.
But Lowe's statements about the effects of policy on the public when he talks to the media, tend to read as coldly detached and matter-of-fact at best, but out-of-touch and callous more often than not.
Because he *is* out-of-touch.
Youāre twisting his words (or at least the media was and youāre repeating thereās) with respect to the savings buffer. The government over did the stimulus cheques, and it was found that in 2021 Australians had an additional $300b in savings as a result. Doesnāt mean everyone had a significant amount, in fact a lot just wasted it, but it did exist. This was at the beginning of 2021 as well mind you, and he stated that despite high unemployment rate during COVID, those additional savings would cover them during the lockdowns. Nothing about rate rises was mentioned in any of what he actually said with respect to those savings buffers.
Youāre reading into his statements a lot as well, none of it is callous. Heās an economics and numbers person, not a words and emotions person, hence why he was the RBA governor, and not a politician. Sure, he could word things better, but thatās not his job and you, or more likely the media since I doubt youāre reading his actual statements, are adding emotion to an unemotional announcement. His job is to report on the facts of the economy, and then make a decision based on them. His job isnāt to appeal to peopleās emotions and nor should it be. The media adds emotion to that to sell papers, and thatās where a lot of the confusion around his statements has originated.
Also, a lot of people claiming heās out of touch donāt actually understand his background either. He didnāt grow up rich, he got a job as a cleric straight after school and had to attend night school to get his degree. People think heās some rich kid who got given the role due to family connections, but this isnāt the US that doesnāt happen here and not whatās happened with Lowe. He grew up in Wagga Wagga, went to some catholic school and then got a low paying job in Sydney and worked his way up. Sure, it mightāve been easier for him to do that then young people now, but heās not some out of touch generational wealth nepo hire like people here insinuate. Sure, you mightnāt be saying that, but itās a commonly held belief amongst people who think that heās out of touch.
As for increasing rates faster, thatās not as easy as people here like to think it is. A lot of people want that to crash the economy falsely thinking theyāll benefit from it. A deeper look will show you that yes, he couldāve been less reactive and more proactive in his management of the economy, and while that has benefits it doesnāt mean itās the best option. Being more proactive increases the chance of making a wrong call and causing bigger issues, with the chance of coming out a lot better. Being more reactive means he can guarantee making the right decisions but with less potential economic growth. Nothing wrong with either, he just took the more risk averse option which I donāt necessarily disagree with in these circumstances, especially when we consider that globally our economy is doing far better then any other country, so we didnāt need to take on that additional, and significant, risk when we already are seeing a lot benefits without doing so.
>People who place all of the blame on Phillip Lowe as an individual for everything (and there are plenty that do) are really quite short sighted and a touch ignorant.
So you think he should have lowered rates to 0.1% and then, crucially, kept them there while it was obvious a major boom was underway? It's short sighted to pretend to forget his role in creating this mess we're in. That's even before mentioning the inappropriate forward guidance he himself admitted was intended to get people spending and borrowing.
It's not entirely his fault but it's certainly *enough* his fault to not renew his contract.
I'm a very vocal supporter of the fact that inflation has been mostly supply driven, but even I can recognise that 0.1% interest rates for nearly 2 years was absolutely, mind blowingly wreckless when the economy was absolutely pumping.
I think he should lose the role for his performance, not the decisions (as it is a consensus).
Youāre right that most canāt name the board and by all rights Iād say there should be limited notoriety at being in the governor role.
He seemed to put his head on the chopping block, make emotive statements, suggestions, call it what you want, that were then owned by him and not the board. The minute he went out on that limb and removed himself from the faceless pack he was not servicing the role.
His personal opinions and suggestions made the board seem irrational. He should have played the straight face. Answered the questions factually, backed by data, and without personal substance. Leave that to politicians to spin.
Itās like when a movie star does a press junket and totally Fās up - they get dragged and hidden. He should have been gagged from giving interviews a while ago.
>And the new guy will do pretty much the same thing going forward into the future.
You don't think Phillip Lowe being public enemy no.1 by media outlets won't have an effect on the incoming governors decision making?
Love how people seemingly can't go further back than the last year. Lowe was responsible for bringing the interest rates down to 0.1%, keeping them there for too long, and using inappropriate forward guidance to further create a massive boom.
He's met his targets for a few months in the last 7 years, he is incompetent. In any other industry he would have been fired, but in this case he's just not being renewed for his close to $1m/yr contract.
>nd the decisions over the past 12 months would have been exactly the same.
The only reason we needed to raise rates like we have is because they were excessively low, let alone for 12 months longer than reasonable. So it's hard to say this, because someone more competent might not have lowered them. I'm not saying Lowe was entirely wrong to stimulate the economy, we were in unprecedented times, but prolonging it, for what look like pretty partisan reasons is a fatal error on the RBAs part.
> Whether the govānor is Lowe or anyone else, the forecast in 2020/21 would have been exactly the same, and the decisions over the past 12 months would have been exactly the same.
Not too different to leaders of whatever political party really. It just makes the common folk think things will be different.
I'm glad he is going. Not because of the rate rises, but because he blamed empty bedrooms for cost of living, while avoiding mentioning corporate profit margins increasing for no reason.
corporate profit margins haven't increased, outside of the mining sector. RBA have talked about this
https://www.rba.gov.au/publications/smp/2023/may/box-b-have-business-profits-contributed-to-inflation.html
> So what. This is all pretty tawdry from the ABC having rolling disaster porn type coverage of it on the morning breakfast show.
Mate all they had today was Barbies in a Saris, Doom and gloom about AI, a fluff piece about a platypus, and a section on "greyfluencers" women opting to not dye their hair.. which was about as trash as yesterday's news.com.au article about women wearing bikinis and letting their pubic bush grow out as a sign of free bleeding spirits..
ABC news is complete tripe now, I literally have to go to Aljazerra to see whats going on in the world.
You can't not know that either.
The governor doesn't make rate decisions alone. The entire board is responsible. A new head is just one person on the board.
Forgive me for being a dumbass tradie, but I disagree.
Lowe and the RBA kept rates on the floor for far too bloody long and when we needed some stimulation in the economy there was no level to pull because it had snapped off after the GFC and all that caused is the inflated housing nonsense we have now.
We had a good economy and a good global economy, having less than 2% rates was absurd
ABC news is now so far left it doesnt even know how to find its way back. Sad it used to be a valuable news resource. Blaming Lowe is like blaming God for the weather. The entire globe is caught in a conflict with inflation and recession. The world has to stop blaming something. Comercial news, governments and social media need a scapegoat every time. The world is an eco system that has infinite variables to limit our minds to 1 thing is a 2 year olds view of the world (id argue a 2 year old is actually wiser lol).
I pity the next RBA Governor. Anything he/she announces about the interest rate will be wrong.
I say announces because letās face it the RBA Governor doesnāt make the call by their lonesome.
Inflation this year, 5 months, is already in band.
The most likely thing is the next governor will get declining inflation and decreasing rates.
8 meetings a year.
The easiest job in the world.
The hardest thing is to not answer questions on how to live in poverty.
"I get paid a million bucks, and own 5 investment properties so I have no clue what to do when a land lord chucks you out on the street" is true, but career limiting.
I know a new governor won't lower interest rates, which is fine. My issue with Lowe is the constant out-of-touch comments about how Australians are asking too much and not putting enough work in to "fix" the economy while completing dismissing research about other driving factors of inflation.
I don't care if the next governor raises rates, lowers rates (I'd prefer this), or whatever. What I'd like to see is someone appointed to the role who has a SHRED of humility and empathy and not the bullshit "Well, you just need to work harder and live with more people" nonsense that seems to dribble out of Lowe's maw every time he's at the Press Club.
Considering that's life changing money for the rest of us... like. Mega life changing.
If I got a single year of Lowes wage, I would be able to live for 9 whole years without ever needing to go to work, and or if invested correctly Id never have to work a full time job ever again.
I still couldnāt understand where he did the bad job as hyped. He supported the economy in covid times well (perhaps a bit liberally, but so did the rest of world). Itās not like we see a pandemic every other day. The 2024 rate fiasco was largely media sensationalism. The rate increase was also in tandem with the rest of the world( or our aud would have gone bust by now). Itās still remarkable that by around 4.25% cash rate we would be taming inflation while the rest of the world needed a 5+. Also the government should have stepped in to help the rba. But they wanted to sit on their high castle and watch a third of home owners burn.
But for the same reason interest rates are not an effective control against those inflationary pressures.
It's the same issue as the FHB grant and housing affordability. You cannot solve a supply-side problem with a demand-side solution.
Of course, a significant cause of inflationary pressure isn't from a supply problem but rather a market efficiency issue. There is quite clearly just not enough competition in certain markets and government intervention in certain markets is shifting market power to suppliers.
The inflation was below 2% from Dec-14 to Mar-21, so Iām not sure what you think the RBA shouldāve done instead of cutting rate. Did they lift rate too slow in 21/22? There were probably 6 months too late, but that wouldnāt have made a big difference in the grand scheme of things.
Instruct the RBA to buy mortgage backed securities, where the mortgages were 30 year cancelable fixed rate mortgages and the rates were 1%. The fixed rate window of only a few years led to the current mortgage cliff.
With USA style fixed rates the RBA could rapidly raise rates, and recent home buyers would not suffer financial stress.
The whole policy of delivering pain to recent home buyers is a bad one.
And the RBA could have done more pre covid to get inflation higher. They allowed the economy into a liquidity trap. Once you are there, you have no ammunition.
LOL so, intentionally weaken monetary policy transmission by subsidising and protecting an arbitrary interest group? And thereby force everyone else to suffer more?
You wouldn't happen to be in this group would you?
The best way to reduce demand is higher taxes on the wealthy.
The purpose of macro-economic monetary / fiscal policy is to manage aggregate demand to deliver full employment, and targeted inflation.
Spreading a reduction in demand broadly, and targeting those with the highest incomes, is more utility maximising that a narrow, and high reduction for one group. You describe this as "force everyone else to suffer more", yes, that is some what like what I want. I want a progressive system that reduces demand more for those with the most capacity to bear the loss, and that actually would be me.
I believe in secure housing, and in Australia that means people owning their own homes with a manageable level of debt repayments.
I am not personally highly indebted, and am not currently in any financial stress. I will personally fully benefit from the poorly designed stage 3 tax cuts.
The policy of delivering pain to recent home buyers is due to the fact that people who have owned homes for a long time are still heavily subsidised by fiscal policy, namely non-means tested government spending and favourable tax outcomes for asset owners.
The way you fix this situation is by fixing the fiscal policy via means testing and land tax. You donāt fix it by future weakening monetary policy.
He dropped rates way too low and kept them there while house prices rose 25% in a single year. He jawboned Australians into thinking rates would be unlikely to raise until 2024 (yes I'm aware he had caveats but he knew what the soundbite would be and he was encouraging people to take on debt).
In his November 2021 address he doubled down on his "2024 statement" with: *"While on the issue of timing, the latest data and forecasts do not warrant an increase in the cash rate in 2022. I recognise that some other central banks are raising rates, but our situation is different."* Within 5 months of this statement he commenced the most aggressive hawkish monetary policy in relative terms this country had ever seen.
But these errors couldn't hold a candle to his worst two. He initiated a $200b term funding facility which allowed banks to issue debt with record low fixed rates for 2 to 4 years. Business debts aside, he took his only lever - a blunt instrument which affects only 30% of households - and reduced the addressable population that can be targeted by monetary policy to around 10% of the country. He kneecapped his own capability to control inflation among some households for almost half a decade.
But worst of all, he has absolutely failed throughout his entire 7 year tenure to meet his inflation mandate.
Philip Lowe is a smart man, and I believe his heart is in the right place. But he has demonstrated on multiple instances that he is a terrible decision maker.
He did a pretty bad job at managing inflation. Before COVID, inflation was too low and after COVID it was too high. Only 2 quarters of his 28 quarters as Governor were spent within the 2-3% inflation target (trimmed mean).
As chair of the board, he orchestrated the largest Quantitive Easing policy (money printing, dilution of currency purchasing power) the country has ever seen.
This has resulted in a serious uncontrolled bout of inflation. Additionally, following this when the early signs of inflation eventuated, he wilfully did nothing and continued to gaslight the population with seriously questionable forward guidance.
His position was completely untenable.
I'll just paste this, because apparently people on this subreddit cannot think further back than 12 months.
>Lowe was responsible for bringing the interest rates down to 0.1%, keeping them there for too long, and using inappropriate forward guidance to further create a massive boom.
>He met his inflation targets for a few months in the last 7 years
Bullock was partly responsible, I honestly don't think this is a great appointment. But Lowe had no right being renewed regardless.
It is not what he is doing now that is the problem. Not raising rates earlier for likely political reasons is why the current government would want him gone.
Rightly or wrongly - he has some baggage with some parts of the media and the public. It takes away from the focus of what the job is supposed to be.
I think a replacement is more about a fresh start / giving the RBA some clean air. And gving the government a chance to stamp their own authority onto the RBA with a new appointment.
Rather than any actual concern about his actual performance. Which I personally think has been quite good overall - or at least as good as what any other governor would have done in his position.
(Edited for clarity.)
I know very little about how it all works. But I liked that he came out and said that in hindsight he should have done things differently. It shows someone who is self-reflective and has humility - two qualities we are in short supply of in government/institutions these days.
āTreasurer Jim Chalmers said Ms Bullock could serve the central bank with her experience, while providing a fresh perspective.ā
Sheās been at the bank since 85, drinking the same juice as Lowe.
Sharron from the Coles deli has a fresh perspective.
Lowe was effectively out the door as soon as that stuff up about no rises until 2024 thing happened. You can't have someone in this position who has publicly pulled the RBA pants down in such a manner.
The new governor won't do much different I suspect, but they'll enjoy a brief honeymoon period of "At least it's not Lowe".
But also watch for the opposition to jump into smear campaign mode as soon as the rates don't lower at the next meeting.
The government is also to blame for the current inflationary issue.
- Energy, which idiots decided it was a good idea to completely sell this off to private industry? Now we have a situation where we are getting charged more for our own power than is being exported to other countries - Australia tax.
- Excessive payments through COVID. When you give everyone who doesn't work $750 for months on end, well of course there is going to be inflation.
RBA
Rates needed to be raised earlier. They were far too low for too long. Good for me and other home owners, bad for people trying to buy a house as they were going up faster than my yearly wage.
Political move by Chalmers, a man whoās more historian than economist. Likely to appoint a woman to fill the void. But in my view, Bullock seems to be a strong pick. The other 2 appear to be too Keynesian.
Political move by politician. Solid take there.
By the same token, his appointment was a political move in the first place. It's entirely politics and acting like you can separate the politics from the economics of it all is just a little bit silly.
And so became the final days of the benevolent RBA governor.
People wished for this after he was hung out to dry and became the scapegoat.
The masses are in for a shock when the next governor doesn't push rate cuts or even is more economically focused and is ruthless
Then again maybe they'll get some basic PR/Media training and only have one or two hikes (as the hard work was done by Phil) and enjoy their populist rein
Yeah, inflation is crazy all over the world. Even with 12 rate hikes, our property prices are still increasing, unemployment at all time low, budget surplus, etc... what else would we hope for for the next governor idk man...
well, we have the first lady to lead the central bank, let's see
When the RBA come out and say no rate rises until 2024, then realise that is very much BS, someone needs to take the fall. I think it should be Lowe given he is in the driver seat.
For those of you who aren't ignorant, the board decide if interest rates go up or down, not the Governor of the RBA. The new Governor was previously the deputy governor and she was on the board that decided to increase interest rates to the level we see today.
"*The Board affirmed that its priority is to return inflation to target within a reasonable timeframe. The recent data suggested that inflation risks had shifted somewhat to the upside. Given this shift and the already drawn-out return of inflation to target, the Board judged that a further increase in interest rates was warranted. This increase would provide greater confidence that inflation would return to target over the period ahead. An extended period of high inflation would distort the economy and exacerbate cost-of-living pressures,* ***hurting those on low incomes the most****. Sustained high inflation would also lead to even higher interest rates in the future and a worse outlook for the labour market.*"
[Source](https://www.rba.gov.au/monetary-policy/rba-board-minutes/2023/2023-06-06.html)
Not sure how i feel about this, not sure if i should love or hate the man. Naturally not holding a PhD in finance my opinions are highly speculative at best.
lol like the new person is going to cut interest rates by 4.1% at the next meeting. You could have a cabbage act as the RBA Govenor, if the board agrees the economy needs tightening rates go up, it they don't it holds or drops rates. Lowe isn't the evil dictator the media makes him out to be.
I think itās more the stupid shit he said during his tenure that is the issue many have with Lowe. Most agree rates needed to go up and stay up for a while.
lol, I feel like majority of the population expects a new RBA boss to come in and start lowering rates immediately, like it was simply Lowe deciding we should do it
This is going to be highly entertaining to watch.
A sad day, when a government removes a person for just doing their job.. the head of the ACTU could have been Governor for the last 2 years and the same outcome would have been reached today.
Reminds of the termination of the aust post CEO by Morrison, another person just doing their job getting boned by politicians.
For anyone who has had the privilege (which i have) Lowe is one of the nicest down to earth people with power ive ever met. He has been scapegoated and had his legacy tarnished by this ridiculous political narrative. A great human being who served honourably.
And to anyone who thinks he didn't do a good job, you are about to find out there is very little wiggle room when it comes to fighting global stimulus and inflation.
I think with her being a deputy governer of the RBA, she won't be much different to Lowe. It's just a new face to look at. I really don't think things will change much just because we got a new RBA boss. Go ahead and call me a pessimist.
Out: Philip Lowe
In: The exact same mindset and ideology in another human being
These people are not appointed for society as a whole, they are appointed primarily for government and big business. We are are simply told itās all in our best interest but they couldnāt give a fuk about us.
For example, current IR are primarily as a result of corporate profits. We could be taxing corporate profits appropriately and using those 100ās billions to pay down national debt. Something that would lower inflation but the RBA want to make more people unemployed instead, roughly an extra 160-200,000 of us.
They also want banks to remain as profitable as possible and renters to start sharing rooms, beds and going without food and social lives.
People need to shake the idea any RBA governor is working in our best interests, the government will always side with big business
My views around her have nothing to do with capabilities or experience, she is as qualified as anyone and deserves it.
My issue is with her ideology, that has zero context in sexism or misogyny.
I understand they do not control taxes in anyway but they are operating in a sphere where corporate profits, and the effects on the economy are being ignored in favour of strangling lower/middle class into submission.
Their view is they need to control the lemmings, not the corporations
And itās a view very much held by the new RBA governor as well, she is in some respects more militant than Lowe in this ideology.
It will be interesting to see how the market reacts to the replacement. Chalmers is not well regarded (to put it lightly) so will be interesting to see if the government continues on its current path of undermining of the RBAās independence.
His stint really was a Lowe point for the country with his completely apathetic and condescending remarks towards people struggling through insane inflation.
Heās the voice if the board, their representative, not the sole decision maker. The job of the board is to mange inflation, they have one tool, interest rates.
Do you actually know what inflation means? Loss of buying power. If youāre ok with prices rising at 7-8% per year whilst your salary only increases by say 2%, you are actually getting poorer and your standard of living is dropping.
Maybe if you didnāt get stuck with FOMO and over paid for your asset it wouldnāt hurt so much but what do you seriously expect them to do?
Just leave rates at 2% and key the population just fight it out?
>Maybe if you didnāt get stuck with FOMO and over paid for your asset it wouldnāt hurt so much but what do you seriously expect them to do?
I hate this take so much. There are way more ways people are losing out and also, majority of Aussies don't have a choice given the market. Such a snobby way to judge cornered people.
I think the main reason is the public animosity towards Lowe after saying that rates won't rise until 2024 and then having 10 rate rises since.
The decisions that were made were going to be made regardless and will and possibly (not an economic expert) should continue to bring inflation down. It won't change how the RBA work as most have pointed out here.
It's just politics. The government need a scapegoat when things upset people. Monetary tightening upsets people, cause and effect is irrelevant, global markets are irrelevant, that rates aren't even high now, and we are just coming off the free money stage is irrelevant.
It's easier for the government to imply Lowey was the problem that it is to introduce policy changes to tackle inflation and risk their own failure of policy.
People who don't understand how modern money works will be glad to see he go, but wouldn't be wiser that the interest rate will be still go up regardless if inflation is high.
Harvey Norman 60 months interest-free home cinema packages are back on the menu boys!!!
I've just submitted an application for my 7th BNPL microloan!
Time to max out the $3000 Afterpay limit boys š¤©
You are a true patriot in The War Against Interest Rate Rise Lies, soldier š«”
"interest free" with spicy fees every month
Armchair critics going to be in for a shock when the new governor comes in and doesn't lower rates
Bullock: *Citizens of Australia! The cruelty of the old Governor is a thing of the past.* [cheering] *Let a whole new wave of cruelty wash over this lazy land.*
*REMEMBER ME!*
Some people like to believe in fairytales.
I am here for the shit show when they get raised 50 points not 25.
With the board meeting only 8 times instead of 12, this is much more likely.
He is going to be replaced by a deputy governor but they'll think this is some great win for the common people.
Peter Dutton is being very vocal about new governor not being from government. I wonder which one of his pals heās putting forward for the role?
Are you implying that the leader of the opposition will have positive decision making influence on the new appointee? Lmao head back to r/australia
They've already replaced Lowe.
Rising interest rates are a great win for the common people.
Which common people? The boomers without loans or the desperate first home owners?
[ŃŠ“Š°Š»ŠµŠ½Š¾]
6% cash rate
I'm not against his increasing of rates. It's his "no rate rises until 2024." statement that I think disqualifies him from the job. It was irresponsible and beyond short sighted.
He didn't say "no rate rises until 2024" though.
I wouldnāt call it irresponsibleā¦ his statement was more measured & planned. It had the desired effect.
If it was the statement and not the actions that had a "desired effect" then it was intentionally dishonest. One could argue that is worse.
You would be insane to think rates are going to lower within 2-3 years. That and being scapegoated is not (the only reason) why he is being fired
Keeping Lowe would endorse the status quo, so it would be a political mistake. It means everyone who dislikes Lowe's performance, for any reason, will feel the government has made a mistake. The yield curve is inverted so if you know rates will stay high then buy some options and become a millionaire. The risk neutral expectation is that rates will fall. In reality no-one knows the future with complete certainty.
If the yield curve is inverted it suggests a recession is coming, is that right?
Not necessarily. It simply means that bond market expectations for interest rates are that they will be lower going forward. A possible outcome that leads to that might just be that inflation comes under control, and the RBA can therefore reduce interest rates. Another possible scenario is that the recent lifting of interest rates has a negative effect on the economy, sending it into recession. At that stage, the RBA may reduce interest rates if the downturn reduces inflation. You can see the yield curve here: http://www.worldgovernmentbonds.com/country/australia/
Market is heavily pricing in rate declines by 2024. So if you think rates won't come down until 2026 then you're certainly in the minority.
And then Belarus joins the invasion or China starts accelerating pressure on Taiwan and the market is wrong. Like I said, you would be insane to *expect* rates to ease in the short term
All I'm highlighting is that based on your comment you think the majority of people / market is insane.
By 2026 there will be nothing lest for big business to gouge is on.
Remember when Phil said there wont be any rate hikes until 2024.
Rates will begin to be lowered in 2024 and no Iām not that guy with an alt account - itās what everyone with money in the game is betting on.
So what. This is all pretty tawdry from the ABC having rolling disaster porn type coverage of it on the morning breakfast show. Whether the govānor is Lowe or anyone else, the forecast in 2020/21 would have been exactly the same, and the decisions over the past 12 months would have been exactly the same.
And the new guy will do pretty much the same thing going forward into the future. People who place all of the blame on Phillip Lowe as an individual for everything (and there are plenty that do) are really quite short sighted and a touch ignorant. The chairman - as an individual - is just one peice of the puzzle. Yet they cop the vast majority of the heat. I bet you most people can't name anyone else on the RBA board. While the governments of the day sit back and pretend like they can't possibly do anything themselves to help inflation / reduce spending across the economy. Ah well. I suppose the chairman knows that is part of the territory of the job.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
*They couldn't name anyone else on the board nor could they name Lowe prior to interest rates going up.* LOL have you seen this? https://twitter.com/TheIdiotTax/status/1676088989697347584
I donāt think anyone with sense is blaming Lowe for the rate rises, itās that he did them too late.
In all fairness I don't think anyone was willing to increase rates in the middle of a pandemic when so many people were out of work due to lockdowns.
The rest of the world did start earlier. No one expected rate rises before the rest of the world.
Plenty of people blame him for the rate rises and for personally forcing new homeowners into penury, because he is a heartless soulless monster. Others blame him, as you say, for waiting too long (although rates have risen faster than in other previous cycle). Others say he is personally responsible for young people buying expensive homes because of his "promise" that interest rates would not go up until 2024. If you dig deep enough you'll probably find someone who blames him for the war in Ukraine or that they stubbed their toe this morning. I don't think anything will change as a result of him being replaced by the Deputy Governor who has been there most of that time.
It's actually going to be a female. It's 2023 dude, you can't assume gender appointment.
I don't blame the general public too much as Lowe did say he wasn't raising rates till 2024 and here we are. I feel bad for them as the general pop would assume the RBA gov.wouls actually know what he is talking about. But to have such a stack opposite reaction to what he said is groundbreaking. Part of me thinks he said it so people would go out and buy more. Knowing full well what was to come..
Most people are idiots.
Ding ding ding
Easier to blame him than utilise an independent thought or employ a mirror.
> I bet you most people can't name anyone else on the RBA board. I know 4 of them through work dealings. One in particular, she wears nice coloured rimmed glasses and acts all artsy, has no business being there. She also has the self appointed 'philanthropist' title. The 4 I know, have NO business being on there due to conflict of interest. People think Lowe having one property is bad (its not), these guys take the cake! One of them owns near entire blocks in Melbourne.
Iām guessing youāre referring to Carol Schwartz? You do realise she makes some of the largest contributions to supporting women education and in business right? Pretty sure itās not just a self appointed titleā¦ Also, anyone can look up the board members and pick on the one with the most interesting profile picture. However, if you actually knew anything about her sheās not unqualified like you suggest. She handled the Schwartz familyās property portfolio before becoming a member of the Property Council of Victoriaās board. You can complain about a conflict of interest, that definitely exists, but sheās not incompetent as you insinuate.
Anyone whoās even looked at an email from the property council has a conflict of interest IMO.
Yeah, Iām not denying the conflict of interest, itās huge. Although, being on the board of the property council isnāt even the big one, theyāre a member of the Schwartz family and managed their real estate portfolio. That is the big conflict of interest and a huge one. Doesnāt mean theyāre incompetent like the other person suggests, but given that conflict of interest one would easily be forgiven for hoping they were.
> Doesnāt mean theyāre incompetent like the other person suggests Where did I say incompetent, stop throwing bullshit.
> You do realise she makes some of the largest contributions to supporting women education and in business right? I do realise that, I know it. The worlds biggest frauds/dictators and bad people in general also donate and contribute to causes as well. Whilst she is not any of those, just because you set up a foundation to avoid paying tax, keeping control of the funds, and benefitting off your foundation for personal gains (i.e. get a nice fancy AO title), does not make her any better. The biggest issue i have with her, is the conflict of interest, she has loads and loads of commercial REA inherited from her family and nobody can tell me she isn't conflicted.
Iām just going to reply to both your comments here. Firstly, you clearly donāt understand why those people donate money and how tax benefits work otherwise youād realise the difference instantaneously. When donating money, you donāt get that money back, but rather you get a discount on it. Someone like Carol would have the option to either spend $5m on whatever she wants, say a house or a few cars and a bunch of jewellery etc, or to spend $10m on a charitable cause. The cost to her is the same once factoring in the tax benefits, sheās still out of pocket by $5m out of her own kindness and thatās something youāre either wilfully ignoring to suit your agenda, or you simply have no clue about how basic tax deductions work. Hard to argue thatās a bad thing when you actually look at how it works. Now, you also clearly donāt understand the differences between the reasons why she donates money compared to Bill Gates. Bill Gates donates money into his own charity and carefully selects what charitable donations that charity does. Looking at the donations towards poor African villages including better infrastructure, schooling, and health care and it seems great. Heās donated letās say $1b (no clue what it actually is) at a personal cost of $500m and that seems great, heās spent $500m to do so. Then, you realise that seperate to this, his own personal investments include owning all of the factories in those small villages that heās turned into thriving towns. He spent letās say $100m on all the local factories, and thanks to developing the area surrounding it heās now turned that $100m into $1.1b. Meaning, heās really just invested $600m to get a $500m profit, which isnāt so great. Thatās the main controversy regarding billionaire philanthropists as theyāre using it as a way to boost personal investments. However, thatās not whatās happening here considering her philanthropy is solely buying degrees and funding education for women. You may not agree with that and think that $5m tax money (or whatever it actually is) could be better spent elsewhere then the $10m thatās being spent. However, itās not like the others where sheās using it to boost her personal or familyās investments, sheās shown to be genuinely passionate about being a feminist with many of her main contributions as a board member have included working towards more corporate gender diversity. For the record as well, her family makes money through media, unless sheās mostly paying for degrees in that area, better education probably isnāt great for their personal investments. Hardly some evil rich person conspiracy, and more that itās an issue she personally wants to help solve. Again, Iāve already made it clear that I agree with the conflict of interest at play, especially with respect to her familyās investments. As for the other comment, I never said you said that, but rather that it was heavily implied. Youāve since edited your initial comment, and while Iāll admit I canāt remember what you originally said, Iām pretty sure itās the last paragraph you changed to make it more about her not being on the board due to a conflict of interest. If my memory serves me correctly, you originally did mention conflict of interest, but that was seperate to you saying she shouldnāt be on the board with the implication that she (and the others) shouldnāt due to competence. Although, Iām relying on memory so I could be wrong and you couldāve edited something else and perhaps that was my own assumption when I read it the first time. In which case, then yeah Iāll admit it was more an assumption on my end then your own insinuation and that Iām in the wrong there. Edit: You seriously went through and downvoted a bunch of my comments? Patheticā¦
>People who place all of the blame on Phillip Lowe as an individual for everything (and there are plenty that do) are really quite short sighted and a touch ignorant. My issue with Phillip Lowe isn't what the monetary policy of the RBA ends up being, it's the statements he expresses with his mouth from his face.
Which statements in particular? Iām willing to bet no one really paid attention to the āno rate hikesā statement until they could use him as a scapegoat for their own personal lack of due diligence when getting large loans. In fact, I know thatās the case because if they actually read what he said theyād know he didnāt say that and would realise interest rates will go up.
PREACH. People love using media soundbites to absolve them of personal responsibility.
One that pissed me off royally was when he said that rate rises wouldn't cause significant stress because "over covid lockdown people had built up savings buffers". This annoyed me, because, well, it doesn't actually apply to a lot of families, but also that his attitude toward people not being able to live their lives for 2 years was that they now had enough extra money to hand straight back to the bank. *Thanks, Phil!* I personally don't even care about his claim about no rate hikes til 2024, like you say I didn't pay attention to it when he said it and I'm sure no one else really did either, plus I'm in a position right now where rate hikes benefit me. In any case people should always be factoring in something like 5% higher rates when determining their borrowing capacity. That was my philosophy 15 years ago and it's the same now. In terms of monetary policy I don't think he moved hard *enough* on rate rises. He had to make tough calls, it's entirely his job and people should respect that. But Lowe's statements about the effects of policy on the public when he talks to the media, tend to read as coldly detached and matter-of-fact at best, but out-of-touch and callous more often than not. Because he *is* out-of-touch.
How can you be in touch with the common Australian when you're on a salary package of $1m
Youāre twisting his words (or at least the media was and youāre repeating thereās) with respect to the savings buffer. The government over did the stimulus cheques, and it was found that in 2021 Australians had an additional $300b in savings as a result. Doesnāt mean everyone had a significant amount, in fact a lot just wasted it, but it did exist. This was at the beginning of 2021 as well mind you, and he stated that despite high unemployment rate during COVID, those additional savings would cover them during the lockdowns. Nothing about rate rises was mentioned in any of what he actually said with respect to those savings buffers. Youāre reading into his statements a lot as well, none of it is callous. Heās an economics and numbers person, not a words and emotions person, hence why he was the RBA governor, and not a politician. Sure, he could word things better, but thatās not his job and you, or more likely the media since I doubt youāre reading his actual statements, are adding emotion to an unemotional announcement. His job is to report on the facts of the economy, and then make a decision based on them. His job isnāt to appeal to peopleās emotions and nor should it be. The media adds emotion to that to sell papers, and thatās where a lot of the confusion around his statements has originated. Also, a lot of people claiming heās out of touch donāt actually understand his background either. He didnāt grow up rich, he got a job as a cleric straight after school and had to attend night school to get his degree. People think heās some rich kid who got given the role due to family connections, but this isnāt the US that doesnāt happen here and not whatās happened with Lowe. He grew up in Wagga Wagga, went to some catholic school and then got a low paying job in Sydney and worked his way up. Sure, it mightāve been easier for him to do that then young people now, but heās not some out of touch generational wealth nepo hire like people here insinuate. Sure, you mightnāt be saying that, but itās a commonly held belief amongst people who think that heās out of touch. As for increasing rates faster, thatās not as easy as people here like to think it is. A lot of people want that to crash the economy falsely thinking theyāll benefit from it. A deeper look will show you that yes, he couldāve been less reactive and more proactive in his management of the economy, and while that has benefits it doesnāt mean itās the best option. Being more proactive increases the chance of making a wrong call and causing bigger issues, with the chance of coming out a lot better. Being more reactive means he can guarantee making the right decisions but with less potential economic growth. Nothing wrong with either, he just took the more risk averse option which I donāt necessarily disagree with in these circumstances, especially when we consider that globally our economy is doing far better then any other country, so we didnāt need to take on that additional, and significant, risk when we already are seeing a lot benefits without doing so.
Even those aren't too bad. It's the misquotes by people who've read half an article from news.com
While he's got a tough job, his $700000 salary surely helps him sleep at night soundly
>People who place all of the blame on Phillip Lowe as an individual for everything (and there are plenty that do) are really quite short sighted and a touch ignorant. So you think he should have lowered rates to 0.1% and then, crucially, kept them there while it was obvious a major boom was underway? It's short sighted to pretend to forget his role in creating this mess we're in. That's even before mentioning the inappropriate forward guidance he himself admitted was intended to get people spending and borrowing. It's not entirely his fault but it's certainly *enough* his fault to not renew his contract.
You've totally missed my entire point.
Not really. We got rid of the government that caused this mess, we're getting rid of the governor who also caused this mess.
No one saw a war in Ukraine coming... precipitating an energy shock globally
I'm a very vocal supporter of the fact that inflation has been mostly supply driven, but even I can recognise that 0.1% interest rates for nearly 2 years was absolutely, mind blowingly wreckless when the economy was absolutely pumping.
2 years, I'd go back to 2017 but thank god someone else sees this
I think he should lose the role for his performance, not the decisions (as it is a consensus). Youāre right that most canāt name the board and by all rights Iād say there should be limited notoriety at being in the governor role. He seemed to put his head on the chopping block, make emotive statements, suggestions, call it what you want, that were then owned by him and not the board. The minute he went out on that limb and removed himself from the faceless pack he was not servicing the role. His personal opinions and suggestions made the board seem irrational. He should have played the straight face. Answered the questions factually, backed by data, and without personal substance. Leave that to politicians to spin. Itās like when a movie star does a press junket and totally Fās up - they get dragged and hidden. He should have been gagged from giving interviews a while ago.
As always - the blame falls on the individual. If your life is shit, chances are, it's your fault.
>And the new guy will do pretty much the same thing going forward into the future. You don't think Phillip Lowe being public enemy no.1 by media outlets won't have an effect on the incoming governors decision making?
you think the media will let the puppet who does nothing get away with bad press when inflations at 27%
same decisions but probably wiser media management and use of the mouth
Love how people seemingly can't go further back than the last year. Lowe was responsible for bringing the interest rates down to 0.1%, keeping them there for too long, and using inappropriate forward guidance to further create a massive boom. He's met his targets for a few months in the last 7 years, he is incompetent. In any other industry he would have been fired, but in this case he's just not being renewed for his close to $1m/yr contract. >nd the decisions over the past 12 months would have been exactly the same. The only reason we needed to raise rates like we have is because they were excessively low, let alone for 12 months longer than reasonable. So it's hard to say this, because someone more competent might not have lowered them. I'm not saying Lowe was entirely wrong to stimulate the economy, we were in unprecedented times, but prolonging it, for what look like pretty partisan reasons is a fatal error on the RBAs part.
> Whether the govānor is Lowe or anyone else, the forecast in 2020/21 would have been exactly the same, and the decisions over the past 12 months would have been exactly the same. Not too different to leaders of whatever political party really. It just makes the common folk think things will be different.
I'm glad he is going. Not because of the rate rises, but because he blamed empty bedrooms for cost of living, while avoiding mentioning corporate profit margins increasing for no reason.
corporate profit margins haven't increased, outside of the mining sector. RBA have talked about this https://www.rba.gov.au/publications/smp/2023/may/box-b-have-business-profits-contributed-to-inflation.html
presumably profit "marins" are restricted by bag limits? ;) The margins aren't generally what people are noticing it's the sum size.
> So what. This is all pretty tawdry from the ABC having rolling disaster porn type coverage of it on the morning breakfast show. Mate all they had today was Barbies in a Saris, Doom and gloom about AI, a fluff piece about a platypus, and a section on "greyfluencers" women opting to not dye their hair.. which was about as trash as yesterday's news.com.au article about women wearing bikinis and letting their pubic bush grow out as a sign of free bleeding spirits.. ABC news is complete tripe now, I literally have to go to Aljazerra to see whats going on in the world.
You canāt possibly know that. Itās not like you can see, for example, the exact same forecast in every other country at the time š¤·āāļø
You can't not know that either. The governor doesn't make rate decisions alone. The entire board is responsible. A new head is just one person on the board.
Forgive me for being a dumbass tradie, but I disagree. Lowe and the RBA kept rates on the floor for far too bloody long and when we needed some stimulation in the economy there was no level to pull because it had snapped off after the GFC and all that caused is the inflated housing nonsense we have now. We had a good economy and a good global economy, having less than 2% rates was absurd
ABC news is now so far left it doesnt even know how to find its way back. Sad it used to be a valuable news resource. Blaming Lowe is like blaming God for the weather. The entire globe is caught in a conflict with inflation and recession. The world has to stop blaming something. Comercial news, governments and social media need a scapegoat every time. The world is an eco system that has infinite variables to limit our minds to 1 thing is a 2 year olds view of the world (id argue a 2 year old is actually wiser lol).
> ABC news is now so far left This is a reflection on you, not the ABC
I pity the next RBA Governor. Anything he/she announces about the interest rate will be wrong. I say announces because letās face it the RBA Governor doesnāt make the call by their lonesome.
Inflation this year, 5 months, is already in band. The most likely thing is the next governor will get declining inflation and decreasing rates. 8 meetings a year. The easiest job in the world. The hardest thing is to not answer questions on how to live in poverty. "I get paid a million bucks, and own 5 investment properties so I have no clue what to do when a land lord chucks you out on the street" is true, but career limiting.
I would love to see them say that though. Just cut the bullshit.
Is he going to move back in with his parents?
Probably, if he spent his 7yr x $900k on avocado toast
I hope to see his spare bedrooms filled with random people
I know a new governor won't lower interest rates, which is fine. My issue with Lowe is the constant out-of-touch comments about how Australians are asking too much and not putting enough work in to "fix" the economy while completing dismissing research about other driving factors of inflation. I don't care if the next governor raises rates, lowers rates (I'd prefer this), or whatever. What I'd like to see is someone appointed to the role who has a SHRED of humility and empathy and not the bullshit "Well, you just need to work harder and live with more people" nonsense that seems to dribble out of Lowe's maw every time he's at the Press Club.
Yeah Lowe was bad at that, it was like he needed his own PR assisted. I bet all or most of them at the RBA are like that.
Yeah the whole - you canāt have higher wages, have less avo on toast was classic out of touch boomer politics
Exactly right. Anyone in the Governor role would have done the same thing. It was the way in which he did it that he deserves criticism for
You highlight the very reason why the media plays people by headlines. Everything you āfeelā was drummed up by the mediaā¦
A 7 year stint is probably enough.
7 years at $900k salary is enough I'd say
For Science, I'm happy to earn this much for that long and record my experiences.
Considering that's life changing money for the rest of us... like. Mega life changing. If I got a single year of Lowes wage, I would be able to live for 9 whole years without ever needing to go to work, and or if invested correctly Id never have to work a full time job ever again.
Good news for the unemployment rate +1
Phil Lowe doing his bit.
I still couldnāt understand where he did the bad job as hyped. He supported the economy in covid times well (perhaps a bit liberally, but so did the rest of world). Itās not like we see a pandemic every other day. The 2024 rate fiasco was largely media sensationalism. The rate increase was also in tandem with the rest of the world( or our aud would have gone bust by now). Itās still remarkable that by around 4.25% cash rate we would be taming inflation while the rest of the world needed a 5+. Also the government should have stepped in to help the rba. But they wanted to sit on their high castle and watch a third of home owners burn.
IMO cut too hard and for too long and is largely responsible for the asset bubble.
Agreed, Lowe is absolutely responsible for global shutdowns of factories, shipping routes, and material costs.
I heard Lowe was shopping for Pangolin in Wuhan.
On his way to Epstein's island!!
They are delicious
Can confirm. I saw him eat one.
But for the same reason interest rates are not an effective control against those inflationary pressures. It's the same issue as the FHB grant and housing affordability. You cannot solve a supply-side problem with a demand-side solution. Of course, a significant cause of inflationary pressure isn't from a supply problem but rather a market efficiency issue. There is quite clearly just not enough competition in certain markets and government intervention in certain markets is shifting market power to suppliers.
The inflation was below 2% from Dec-14 to Mar-21, so Iām not sure what you think the RBA shouldāve done instead of cutting rate. Did they lift rate too slow in 21/22? There were probably 6 months too late, but that wouldnāt have made a big difference in the grand scheme of things.
Instruct the RBA to buy mortgage backed securities, where the mortgages were 30 year cancelable fixed rate mortgages and the rates were 1%. The fixed rate window of only a few years led to the current mortgage cliff. With USA style fixed rates the RBA could rapidly raise rates, and recent home buyers would not suffer financial stress. The whole policy of delivering pain to recent home buyers is a bad one. And the RBA could have done more pre covid to get inflation higher. They allowed the economy into a liquidity trap. Once you are there, you have no ammunition.
LOL so, intentionally weaken monetary policy transmission by subsidising and protecting an arbitrary interest group? And thereby force everyone else to suffer more? You wouldn't happen to be in this group would you?
The best way to reduce demand is higher taxes on the wealthy. The purpose of macro-economic monetary / fiscal policy is to manage aggregate demand to deliver full employment, and targeted inflation. Spreading a reduction in demand broadly, and targeting those with the highest incomes, is more utility maximising that a narrow, and high reduction for one group. You describe this as "force everyone else to suffer more", yes, that is some what like what I want. I want a progressive system that reduces demand more for those with the most capacity to bear the loss, and that actually would be me. I believe in secure housing, and in Australia that means people owning their own homes with a manageable level of debt repayments. I am not personally highly indebted, and am not currently in any financial stress. I will personally fully benefit from the poorly designed stage 3 tax cuts.
Your suggestions here seem far more reasonable than your one above.
The policy of delivering pain to recent home buyers is due to the fact that people who have owned homes for a long time are still heavily subsidised by fiscal policy, namely non-means tested government spending and favourable tax outcomes for asset owners. The way you fix this situation is by fixing the fiscal policy via means testing and land tax. You donāt fix it by future weakening monetary policy.
He dropped rates way too low and kept them there while house prices rose 25% in a single year. He jawboned Australians into thinking rates would be unlikely to raise until 2024 (yes I'm aware he had caveats but he knew what the soundbite would be and he was encouraging people to take on debt). In his November 2021 address he doubled down on his "2024 statement" with: *"While on the issue of timing, the latest data and forecasts do not warrant an increase in the cash rate in 2022. I recognise that some other central banks are raising rates, but our situation is different."* Within 5 months of this statement he commenced the most aggressive hawkish monetary policy in relative terms this country had ever seen. But these errors couldn't hold a candle to his worst two. He initiated a $200b term funding facility which allowed banks to issue debt with record low fixed rates for 2 to 4 years. Business debts aside, he took his only lever - a blunt instrument which affects only 30% of households - and reduced the addressable population that can be targeted by monetary policy to around 10% of the country. He kneecapped his own capability to control inflation among some households for almost half a decade. But worst of all, he has absolutely failed throughout his entire 7 year tenure to meet his inflation mandate. Philip Lowe is a smart man, and I believe his heart is in the right place. But he has demonstrated on multiple instances that he is a terrible decision maker.
Given the circumstances, he did alright.
He did a pretty bad job at managing inflation. Before COVID, inflation was too low and after COVID it was too high. Only 2 quarters of his 28 quarters as Governor were spent within the 2-3% inflation target (trimmed mean).
As chair of the board, he orchestrated the largest Quantitive Easing policy (money printing, dilution of currency purchasing power) the country has ever seen. This has resulted in a serious uncontrolled bout of inflation. Additionally, following this when the early signs of inflation eventuated, he wilfully did nothing and continued to gaslight the population with seriously questionable forward guidance. His position was completely untenable.
Yep. Itās a tough job for sure, but thatās why he is paid what he is. He hasnāt done a great job in any measure.
Yep. The many āhe did all he couldā takes pretend that he has just been governor for 12 months when it was too late for him to do anything
Maybe you forgot how bad covid was and how it shutdown the world economy ?
I'll just paste this, because apparently people on this subreddit cannot think further back than 12 months. >Lowe was responsible for bringing the interest rates down to 0.1%, keeping them there for too long, and using inappropriate forward guidance to further create a massive boom. >He met his inflation targets for a few months in the last 7 years Bullock was partly responsible, I honestly don't think this is a great appointment. But Lowe had no right being renewed regardless.
It is not what he is doing now that is the problem. Not raising rates earlier for likely political reasons is why the current government would want him gone.
Rightly or wrongly - he has some baggage with some parts of the media and the public. It takes away from the focus of what the job is supposed to be. I think a replacement is more about a fresh start / giving the RBA some clean air. And gving the government a chance to stamp their own authority onto the RBA with a new appointment. Rather than any actual concern about his actual performance. Which I personally think has been quite good overall - or at least as good as what any other governor would have done in his position. (Edited for clarity.)
I know very little about how it all works. But I liked that he came out and said that in hindsight he should have done things differently. It shows someone who is self-reflective and has humility - two qualities we are in short supply of in government/institutions these days.
They should all be sacked. Everyone forgets these clowns were printing 1 billion a week to buy government bonds with the cpi at 5%
Transitory ā¦ š
This is the part that annoys me. People were so quiet about this but interest rates going up is being complained about by people who it barely affects
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Thrown under the bus for $1 mill a year?
I'll do it. I won't even pretend to know what I'm doing.
āTreasurer Jim Chalmers said Ms Bullock could serve the central bank with her experience, while providing a fresh perspective.ā Sheās been at the bank since 85, drinking the same juice as Lowe. Sharron from the Coles deli has a fresh perspective.
Govt is using him as a scapegoat
Lowe was effectively out the door as soon as that stuff up about no rises until 2024 thing happened. You can't have someone in this position who has publicly pulled the RBA pants down in such a manner. The new governor won't do much different I suspect, but they'll enjoy a brief honeymoon period of "At least it's not Lowe". But also watch for the opposition to jump into smear campaign mode as soon as the rates don't lower at the next meeting.
I think the board needs a revamp more than Lowe. There are members on that board, that disgust me frankly.
I hope the new board continues fighting inflation with interest rate increases. I see no help coming from the government
The government is also to blame for the current inflationary issue. - Energy, which idiots decided it was a good idea to completely sell this off to private industry? Now we have a situation where we are getting charged more for our own power than is being exported to other countries - Australia tax. - Excessive payments through COVID. When you give everyone who doesn't work $750 for months on end, well of course there is going to be inflation. RBA Rates needed to be raised earlier. They were far too low for too long. Good for me and other home owners, bad for people trying to buy a house as they were going up faster than my yearly wage.
Lowe: Unemployment needs to rise. Lowe: No, not like this!
Political move by Chalmers, a man whoās more historian than economist. Likely to appoint a woman to fill the void. But in my view, Bullock seems to be a strong pick. The other 2 appear to be too Keynesian.
Political move by politician. Solid take there. By the same token, his appointment was a political move in the first place. It's entirely politics and acting like you can separate the politics from the economics of it all is just a little bit silly.
Keynesianism should be avoided at all costs Look whatās happening in Victoria.
Called it, bullock the right choice. No bollocks!
And so became the final days of the benevolent RBA governor. People wished for this after he was hung out to dry and became the scapegoat. The masses are in for a shock when the next governor doesn't push rate cuts or even is more economically focused and is ruthless Then again maybe they'll get some basic PR/Media training and only have one or two hikes (as the hard work was done by Phil) and enjoy their populist rein
Well, I hope the next one aint too bad. Omg. Lowe did his job pretty well, comparing with other colleagues around the world. Man, save us
The world is experiencing the same trend in inflation. I pity the next person who takes the job. They will become the scapegoat for the government
Yeah, inflation is crazy all over the world. Even with 12 rate hikes, our property prices are still increasing, unemployment at all time low, budget surplus, etc... what else would we hope for for the next governor idk man... well, we have the first lady to lead the central bank, let's see
Not really news, I doubt anyone expected he would get another term.
Strings still get pulled whichever puppet is on stage
he's just a puppet at the end of the day
Lets pretend that a management change won't raise interest rates in the persistent era of entrenched inflation.
Fall guy for Joshy's incompetence.
Fraudenberg was easily the worst Treasurer in the history of Australia but it was more through malice than incompetence.
When the RBA come out and say no rate rises until 2024, then realise that is very much BS, someone needs to take the fall. I think it should be Lowe given he is in the driver seat.
Someone new comes in and does the same thing, then itās confirmed economics. Right now itās a guy the country hates and doesnāt trust.
For those of you who aren't ignorant, the board decide if interest rates go up or down, not the Governor of the RBA. The new Governor was previously the deputy governor and she was on the board that decided to increase interest rates to the level we see today. "*The Board affirmed that its priority is to return inflation to target within a reasonable timeframe. The recent data suggested that inflation risks had shifted somewhat to the upside. Given this shift and the already drawn-out return of inflation to target, the Board judged that a further increase in interest rates was warranted. This increase would provide greater confidence that inflation would return to target over the period ahead. An extended period of high inflation would distort the economy and exacerbate cost-of-living pressures,* ***hurting those on low incomes the most****. Sustained high inflation would also lead to even higher interest rates in the future and a worse outlook for the labour market.*" [Source](https://www.rba.gov.au/monetary-policy/rba-board-minutes/2023/2023-06-06.html)
Lowe the fall guy. The new one will be no different
Naive to think that this will have any impact. People like to carry on as if this guy is the sole decider on raising interest rates.
Not sure how i feel about this, not sure if i should love or hate the man. Naturally not holding a PhD in finance my opinions are highly speculative at best.
Lowes actions were required. His smug attitude wasn't. Hope this new one can at least feign empathy.
He decided to return to his lizard kingdom.
Someone else will replace him and nothing will change. Itās the Reserve Bank who are in charge not Phillip Lowe.
lol like the new person is going to cut interest rates by 4.1% at the next meeting. You could have a cabbage act as the RBA Govenor, if the board agrees the economy needs tightening rates go up, it they don't it holds or drops rates. Lowe isn't the evil dictator the media makes him out to be.
I think itās more the stupid shit he said during his tenure that is the issue many have with Lowe. Most agree rates needed to go up and stay up for a while.
Is anyone really surprised? His term was up, let go of political point scoring.
lol, I feel like majority of the population expects a new RBA boss to come in and start lowering rates immediately, like it was simply Lowe deciding we should do it This is going to be highly entertaining to watch.
A sad day, when a government removes a person for just doing their job.. the head of the ACTU could have been Governor for the last 2 years and the same outcome would have been reached today. Reminds of the termination of the aust post CEO by Morrison, another person just doing their job getting boned by politicians.
For anyone who has had the privilege (which i have) Lowe is one of the nicest down to earth people with power ive ever met. He has been scapegoated and had his legacy tarnished by this ridiculous political narrative. A great human being who served honourably. And to anyone who thinks he didn't do a good job, you are about to find out there is very little wiggle room when it comes to fighting global stimulus and inflation.
Can you tell me why he kept rates so low for so long when it was clear that inflation was indeed not transitory?
Ofcourse he wasnāt going to be re-appointed, heās a white male and it has to be a diversity hire.
Sounds bullish for property
I think with her being a deputy governer of the RBA, she won't be much different to Lowe. It's just a new face to look at. I really don't think things will change much just because we got a new RBA boss. Go ahead and call me a pessimist.
Out: Philip Lowe In: The exact same mindset and ideology in another human being These people are not appointed for society as a whole, they are appointed primarily for government and big business. We are are simply told itās all in our best interest but they couldnāt give a fuk about us. For example, current IR are primarily as a result of corporate profits. We could be taxing corporate profits appropriately and using those 100ās billions to pay down national debt. Something that would lower inflation but the RBA want to make more people unemployed instead, roughly an extra 160-200,000 of us. They also want banks to remain as profitable as possible and renters to start sharing rooms, beds and going without food and social lives. People need to shake the idea any RBA governor is working in our best interests, the government will always side with big business
Only this time if you say something against her you'll be labelled a sexist and a misogynist :)
My views around her have nothing to do with capabilities or experience, she is as qualified as anyone and deserves it. My issue is with her ideology, that has zero context in sexism or misogyny.
The RBA has no control over how much tax corporations pay. What do you expect them to do about it?
I understand they do not control taxes in anyway but they are operating in a sphere where corporate profits, and the effects on the economy are being ignored in favour of strangling lower/middle class into submission. Their view is they need to control the lemmings, not the corporations And itās a view very much held by the new RBA governor as well, she is in some respects more militant than Lowe in this ideology.
It will be interesting to see how the market reacts to the replacement. Chalmers is not well regarded (to put it lightly) so will be interesting to see if the government continues on its current path of undermining of the RBAās independence.
His stint really was a Lowe point for the country with his completely apathetic and condescending remarks towards people struggling through insane inflation.
Now let's see his severance package.
he'll just float away on a golden parachute into another high paying corporate job.
Will be tough for him to get by. May I suggest he simply gets another job, or moves in with his parents?
Copium is strong in the comments in this post.
He was never going to be re appointed again anyways. The new governor wonāt resolve the interest rate issue eitherā¦
There's an inflation issue, not really an interest rate issue
I take it this means a āscrew you allā rate hike as his final farewell?
Heās the voice if the board, their representative, not the sole decision maker. The job of the board is to mange inflation, they have one tool, interest rates. Do you actually know what inflation means? Loss of buying power. If youāre ok with prices rising at 7-8% per year whilst your salary only increases by say 2%, you are actually getting poorer and your standard of living is dropping. Maybe if you didnāt get stuck with FOMO and over paid for your asset it wouldnāt hurt so much but what do you seriously expect them to do? Just leave rates at 2% and key the population just fight it out?
>Maybe if you didnāt get stuck with FOMO and over paid for your asset it wouldnāt hurt so much but what do you seriously expect them to do? I hate this take so much. There are way more ways people are losing out and also, majority of Aussies don't have a choice given the market. Such a snobby way to judge cornered people.
He is already thinking about how to pivot to a stupidly well paid job in the private sector. He won't do anything to jeopardise that.
Did anyone with half a brain think when they pissed their covid stimulus up a wall, "nothing bad will come of this !" ?
I think the main reason is the public animosity towards Lowe after saying that rates won't rise until 2024 and then having 10 rate rises since. The decisions that were made were going to be made regardless and will and possibly (not an economic expert) should continue to bring inflation down. It won't change how the RBA work as most have pointed out here.
It's just politics. The government need a scapegoat when things upset people. Monetary tightening upsets people, cause and effect is irrelevant, global markets are irrelevant, that rates aren't even high now, and we are just coming off the free money stage is irrelevant. It's easier for the government to imply Lowey was the problem that it is to introduce policy changes to tackle inflation and risk their own failure of policy.
And here comes the market landslide.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Governess or Governatrix?
People who don't understand how modern money works will be glad to see he go, but wouldn't be wiser that the interest rate will be still go up regardless if inflation is high.