Should RBA Governor Lowe Resign?

Trying2SaveABuck on 04/05/2022 - 12:29
Last edited 04/05/2022 - 13:08

Less then a year ago Dr Lowe publicly announced interest rises wouldn't rise any earlier then 2024- this clearly would of influenced a number of peoples decisions to take out loans - This statement at the time might of seemed reasonable and lured some borrowers into a false sense of security.

https://www.afr.com/policy/economy/lowe-admits-embarrassing-…

My question is this incredibility irresponsible handling of Australias cash rate could have large impacts on a number of Australians.

Now i agree interest rates had to rise based on inflation but this comments about the cash rate are far more damaging then some people realise

I feel like there needs to be some accountability as Dr Lowe is paid $911,728 pa to be Governor of the RBA i personally think he should be shown the door or forced to walk.

I'd almost argue the lack of criticism on him right now is a bit of a joke his comments could turn out to be incredibility damaging for a number of borrowers.

Full disclosure: I have a home loan but im fixed for the rate rise doesnt affect me in anyway right now but im curious to know what people think

Update: looks like most people are 'alright' with it personally i'd like to see him replaced but i find it interesting people find it interesting as he is a very high paid 'public' servant that people dont expect better.

Poll Options

  • 155
    Lowe should be sacked or resign
  • 495
    Lowe should stay
  • 21
    Unsure
Financial

Comments

  • Jimothy Wongingtons on 04/05/2022 - 12:32
    +96

    only if scomo is booted out first

      • GG57 on 04/05/2022 - 13:12
        +24

        …The Governor and Deputy Governor are appointed by the Treasurer for terms of up to seven years…

        We also elect politicians, not Prime Ministers.

      • lgacb08 on 04/05/2022 - 18:14
        +70

        there're 2 tools to revive the economy in times of crisis, RBA has only one and it's a blunt one. Scotty has the better one but did poorly, instead of throwing money and initiatives to increase productivity he just threw free cash to those not in need or used it poorly.

        • blwnhr on 05/05/2022 - 09:30
          +26

          ^^^ This.

          The RBA has said all along, they only have one lever to pull, the government has unlimited options at their disposal.

          The current government has a pedigree for deferring blame to everyone else, including in this case of monetary policy. The gov't doesn't know how to fix it so instead throw the blame back to the RBA which is just wrong.

          • cadwalader on 05/05/2022 - 11:54
            +2

            @blwnhr: 100%. And the people who only get their news from second hand sources (such as journalists with agendas, social media or real estate "news" sites) lapped it up hook line and sinker. If anyone bothers to read the RBA press releases directly, they'll see that the picture is quite different from one being painted by the second hand sources.

          • Jimothy Wongingtons on 05/05/2022 - 13:48
            +13

            @blwnhr:

            The current government has a pedigree for deferring blame to everyone else

            scomo: i dont hold the monetary policy, mate - also how good's this (RAW) chicken curry?

        • Krankite on 07/05/2022 - 12:45
          +1

          Gerry Harvey needs that money

          • CptnObvious on 07/05/2022 - 20:35

            @Krankite: Thank you, finally someone is decent enough to think of Gerry

    • gimli on 05/05/2022 - 20:55
      +13

      gotta get rid of scumdog scomo!

      • Jimothy Wongingtons on 05/05/2022 - 20:58
        +2

        gotta get rid of scumdog scomo!

        Better slogan than the odd, half cooked slogan from scummo:

        Strong curry. Strong economy. Stronger future

        Lmfaoooo

  • DashCam AKA Rolts on 04/05/2022 - 12:37
    +40

    You borrow within the guidelines of the lender. Part of that process is the lender ensuring the borrower can continue to service the loan with several interest rate rises. People borrow to buy a house, the advice of RBA Governor would play little to no part in the decision making, unless you were misleading your lender, or investing long term instead of purchasing a PPOR.

      • kiitos on 05/05/2022 - 07:59
        +6

        So what prompted you to fix your rate?

        • haemolysis on 05/05/2022 - 08:57
          -8

          Fixed rates were lower than variable for basically the entire pandemic.. regardless of the RBA backflipping, everyone with financial literacy would have fixed.

          • aboogee on 06/05/2022 - 20:40

            @haemolysis: crap not sure why the downvote
            i sometimes am afraid of voicing my opinion but the statement above is correct!
            i recall CBA variable at 3%+ and fixed rate was also 2%
            it really was a no brainer

        • elektron on 05/05/2022 - 11:25
          +4

          Common sense prompted me to fix it. Why wouldn't you fix at 1.85% for 4 years? The only way from there is up.

        • Brianqpr on 05/05/2022 - 15:58
          +7

          For me it was a belief that rates could not really get much lower. I fixed for 3 years at 1.86% around September last year.

          The same bank's fixed rates for 3 years are now 4.53%, which proves that forecasts such as we are seeing now are nothing more than guesswork and speculation. Banks only maybe 6 months ago or so were offering under 2% for 3 years, clearly thinking low rates were here to stay. Now the media would have us believe that multiple rate rises are an absolute certainty. They are not, nothing in economics ever is.

          • smalltime0 on 05/05/2022 - 17:41

            @Brianqpr: The US rates are rising, which means the cost to our banks are going to as well. The banks look to their cost of supply, beforelooking at the cash rate.

        • gimli on 05/05/2022 - 20:56

          it was broken so they fixed it…

      • CalmLemons on 05/05/2022 - 20:34
        +13

        Mate, I'll be honest people like you are the reason why the banks have a milliion rules now with borrowers so that they can't be sued by people who couldn't afford the loans in the first place, the people who complain when they realise they could never afford the loan they took.

        Now in a more rational sense, you're there to make your own financial decisions.

        No one expeted inflation to go so sky high, no one expected Putin to invade the Ukraine.

        We can only deal with reality as it is, instead of finding someone to blame.

        If we didn't raise the rates, you'll get so much stagflation you might as well not go to work as the cost of living will far outweigh your wages exponentially.

        We do what needs to be done, not cry about our own financial decisions.

        The lesson in life here is do not cry because the world is not as we envisioned it to be, but rather deal with the reality that is.

        Instead of saving a buck, find ways to make more money. You can only save as much as you earn.

  • WreckTangle on 04/05/2022 - 12:39
    +50

    Perhaps interest rates should have been raised long ago, maybe thats what should be investigated.

    • Trying2SaveABuck on 04/05/2022 - 12:42
      -2

      I agree with this - but still think his comments looks back now considering the Cash rate gas gone up 20 months earlier then he was saying

      • [Deactivated] on 04/05/2022 - 15:58
        +12

        I rather it had gone up now than 20 months later.

      • cadwalader on 05/05/2022 - 10:18
        +9

        I don't know why anyone would think that the RBA would only move rates up in 2024 and not because of any other reasons (was this because of clickbait newscorp articles?). From the RBA press releases directly, they have always maintained that rates would go up when inflation did.

        The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band

        https://www.rba.gov.au/media-releases/2020/mr-20-11.html

        Which is what happened.

        The RBA forward guidance was just based on a more pessimistic "central scenario" if we didn't recover from COVID quickly. If remember how bleak things were and how ridiculed the RBA has been in the past for having an optimistic outlook?. Just a few months ago, no one had any idea if any more lockdowns would happen. I don't know why the media grabbed onto it so tightly because the requirement for rates to go up was always inflation and employment, never the year.

        • 811b11e8 on 05/05/2022 - 10:37
          +5

          Newscorp trying to make Dr Lowe look bad to remove attention from Scott Morrison.

          • cadwalader on 05/05/2022 - 11:04
            +1

            @811b11e8: Thats what I think as well. Throughout the pandemic I have never seen Scott Morrison make more than a couple of statements (he might have but I do not honestly recall) on the economy, housing or jobs. Lowe had to front up to the media almost every month and probably times in between. It just seemed obvious that the federal government was trying to add a layer of plausible deniability between them and the RBA. The absence or intentionally disconnect was quite strange to me. Maybe its entirely appropriate but it felt like Scott Morrison was intentionally making it seem like he neither supported nor disagreed with the monetary policy.

    • HairyChickens on 05/05/2022 - 01:36
      +8

      Interests rates were too Lowe

    • Brianqpr on 05/05/2022 - 16:01

      Very easy with hindsight. Banks were offering 3 year fixed rates under 2% not much more than six months ago. Go have a look at the 3 year rates on offer now. Clearly all their financial experts didn't see significant rises coming.

      Also, much of the inflation is due to global factors, therefore it is questionable how much difference RBA moves can even make.

    • RedHab on 06/05/2022 - 13:10

      What should also be investigated is how many investment properties Phil and his RBA board members offloaded before raising rates.

      Their financial affairs should be public, just like those of MPs.

      • rektrading on 06/05/2022 - 13:34

        Inside RBA governor’s simple finances
        Ronald Mizen Economics correspondent
        May 6, 2021 – 12.08pm

        Despite a take home salary just north of $1 million, the financial affairs of Reserve Bank of Australia governor Philip Lowe could be described as nothing other than plain and simple.

        The nation’s top central banker holds just one stock directly, blue chip telco Telstra; has no investment properties, company directorships, or trusts; and has just one liability: a credit card from the Commonwealth Bank.

  • MS Paint on 04/05/2022 - 12:43
    +26

    Less then a year ago Dr Lowe publicly announced interest rises wouldn't rise any earlier then 2024

    It's a guide not legislation

      • MS Paint on 04/05/2022 - 12:55
        +48

        Did he know that Russia would invade Ukraine or Amber and Johnny were going to court a year ago. No. So many variables outside of his control.

          • MS Paint on 04/05/2022 - 13:31
            +14

            @Trying2SaveABuck: Why misquote me?

          • johnno07 on 05/05/2022 - 11:33
            +12

            @Trying2SaveABuck:

            1 million dollar package…. he shouldn't be this wrong ever…

            Curious about what the lower salary limit for being a prophet is. Is it $900,000?
            If I only earn $800,000 can I just be a soothsayer with a 90% hit rate?

            • Trying2SaveABuck on 05/05/2022 - 11:47
              -1

              @johnno07:

              Curious about what the lower salary limit for being a prophet is. Is it $900,000? If I only earn $800,000 can I just be a soothsayer with a 90% hit rate?

              it isn't really the point ….what im saying is he has paid well to do a very important job and to come out and be that wrong on something imo he should walk or be told to walk but if people are alright with it then fair enough

              • amsaini15 on 05/05/2022 - 13:16

                @Trying2SaveABuck: I agree somewhat with Trying2SaveABuck.
                If we all say he did not what is going to happen then how did he say interest rate will not increase until 2024?
                Do we have excuse to say I did not see future when we fail at our work? At his level, he is expected to guide market and not say something which he can't be sure of.

          • Brianqpr on 05/05/2022 - 16:06

            @Trying2SaveABuck: No economists ever get long term forecasts perfectly right, its like trying to predict the weather.

        • orangetrain on 04/05/2022 - 15:44
          +1

          Did he know that money supply doubled since covid?

          Does he know who's responsible for the money supply?

          Does he know about the government debt?

          With all this excess money from government and money supply, does he know where it went?

        • mdavant on 05/05/2022 - 06:31
          +5

          So you should buy the Depp?

          • supersabroso on 06/05/2022 - 11:05

            @mdavant: Absolutely not, there's a 75% chance that the market will crash heavily. 25% chance it will rally substantially before it crashes heavily.

          • Littlevu on 06/05/2022 - 15:41
            +1

            @mdavant: Being in a Depp trap will only end up in court.

        • surg3on on 05/05/2022 - 14:02

          It was always a stupi dstatement and nobody in the know believed it

      • apsilon on 04/05/2022 - 12:57
        +11

        Nothing is static, things change. He could've been 100% correct at the time of that statement but variables change over time. I can't believe the furore that's come up over this. If people put themselves in a position where 0.25% was going to break them then they over extended themselves right from the start. Interest rates were always going to rise at some point, 18 months is hardly going to change the outcome. Everyone has had the time and opportunity to fix their rate. This won't be the last rate rise in the next few years so if people can't handle 0.25% now, they should get out while they can.

    • jayzee on 05/05/2022 - 16:00
      -5

      Being the governor of a central bank, he should know better. How can he says something that could affect the decision of many others without any prudence? Yes, I know he doesn't have crystal ball, but to predict the rate to stay on historical low 0.1% for 3 years? You would wonder if he actually had the crystal ball.

  • metrosilver on 04/05/2022 - 12:45
    +14

    It's absolutely criminal what the central banks around the world have done simply to kick the can down the road when the evidence of inflation was right in their face. Only way we are going to get out of it is wage growth or massive immigration, I wonder what corporations will push for and of course get.

    • plmko on 04/05/2022 - 14:14
      +6

      We already have it with the Scomo trade deal with India. Unprecedented erosion of professional accreditation.

  • orangetrain on 04/05/2022 - 12:45
    +23

    Scott Morrison hand picked Lowe.

    RBA is as independent as the ABC. Not just that, the RBA generated so much money supply that everyone's cash is now half of their worth since covid. We already saw the massive inflation when house prices exploded.

    Media said FOMO was to blame for house prices. Now they're saying Russia war/global supply is to blame.

    Do you believe this? Guess who controls the media?

    • Trying2SaveABuck on 04/05/2022 - 12:49
      -5

      Ill go back to my comment above the Australian people have the ability to 'fire' and 'hire' Scomo for another term we dont have that same ability over the reserve bank.

      I dont really care what the media says i care that the man incharge of our cash rate can be so incredibility wrong about something and not lose his job

      • orangetrain on 04/05/2022 - 12:56
        +13

        He may lose his job over this, but he succeeded in generating huge billions for someone at expense of Australians including you! I am sure he's going to be well paid when he retires. After all, Scott Morrison picked him for a reason, even not discussing the pick with the opposition.

        I would advocate for ICAC for government management roles. Dig it up and jail them if they're corrupt so they can't enjoy retirement.

      • chrisn26 on 04/05/2022 - 12:59
        +5

        Technically we also don't elect our PMs. You confusing AUS with USA?

      • GG57 on 04/05/2022 - 13:20
        +4

        The Australian people do not have the ability to 'fire' and 'hire' Scomo.

        The voters in his electorate vote for their preferred candidate, as do voters in each electorate.
        If Scomo were to be elected, that would be as the representative for his electorate (only). It is the majority party (or group of parties and/or non-aligned individuals who make up a majority coalition government) which chooses a Prime Minister.

  • MrHyde on 04/05/2022 - 12:49
    +12

    https://www.abc.net.au/news/2021-07-06/reserve-bank-interest…

    "The condition for an increase in the cash rate depends upon the data, not the date; it is based on inflation outcomes, not the calendar," he said.
    "The central scenario remains that the condition for a lift in the cash rate will not be met until 2024."

    That was in July 2021. There was no war in Ukraine at the time - only Covid recovery. The Ukraine situation changed things by causing a further spike in inflation. The data changed; leading to a change in conditions.

    • Trying2SaveABuck on 04/05/2022 - 12:51

      we had signs of higher inflation before the war started…due to MMP

      • serideth on 05/05/2022 - 15:43
        +3

        I don't get your complaint against the RBA.

        If the signs for higher inflation was there then there was the possibility of higher interest rates.

        The statements from the RBA are not a promise or a binding contract.
        The only thing that can be counted upon is the actual rate decision made each month, everything else apart from that is speculation and if you made large financial decisions based on speculation then there is always risk involved.

        • Trying2SaveABuck on 05/05/2022 - 15:45
          -1

          The statements from the RBA are not a promise or a binding contract.

          it was irresponsible to make a comment to make when you are in a position like Lowe is in

          • jayzee on 05/05/2022 - 16:06
            +1

            @Trying2SaveABuck: Totally irresponsible to make a comment like that, you can argue he could not predict the inflation could rise so rapidly, he could not predict the war between Russia and Ukraine, but can he read the ultra hot property market, labour shortage, material supply issues? If he couldn't read those signs, only can read the inflation figure, why should he keep the job?

            • Trying2SaveABuck on 05/05/2022 - 16:09
              -2

              @jayzee:

              Totally irresponsible to make a comment like that, you can argue he could not predict the inflation could rise so rapidly, he could not predict the war between Russia and Ukraine, but can he read the ultra hot property market, labour shortage, material supply issues? If he couldn't read those signs, only can read the inflation figure, why should he keep the job?

              This is 100% my point - it is either he is an incompetent or he is clumsy either way i wouldnt want him in the job of such high importance.

              • Gareth on 05/05/2022 - 18:28
                +1

                @Trying2SaveABuck: What you will end up with following this line, is that the Reserve Bank will never make any forward-looking statement.

                Is that what you'd prefer?

                While they might occasionally forecast an economic outlook that changes rapidly (over the following ~ half of a year or so), but mostly it gives the money markets - and therefore the public - some kind of estimate of what the RBA expects in the medium term.

              • Vaiels on 06/05/2022 - 02:33
                +1

                @Trying2SaveABuck: Where do people get the idea that economists have a crystal ball? I don't think someone should get sacked for not being clairvoyant. His job is to control inflation and unemployment, that's it, not to tell the future.

  • tsunamisurfer on 04/05/2022 - 12:59
    +33

    No he should not be sacked or resign.

    If you as a borrower based your decisions based on that once statement, then you are the fool.

    Interest rates move, in a cycle, that has been true for decades.

    • Trying2SaveABuck on 04/05/2022 - 13:06
      -1

      If you as a borrower based your decisions based on that once statement, then you are the fool.

      i agree

      Interest rates move, in a cycle, that has been true for decades.

      i'd say a large % of people who have loans have never experienced an interest rate increase and if they have it would be very few…So you are correct but surely a Governor should be held to account for such a poor statement?

      • tsunamisurfer on 04/05/2022 - 13:11
        +10

        So you are correct but surely a Governor should be held to account for such a poor statement?

        His job is to pull the monetary policy lever to control the economy.

        The economy as it stands now has shown signs of overheating (inflation) for a few months now and thus is an appropriate time to pull said lever.

        Do you want him to take appropriate action OR reflect on what he said and let the economy overheat more for another 2 years until what he said expired?

        • Crow K on 04/05/2022 - 13:18
          +12

          Exactly. The fact someone can get so pent up about a "promise" (?) not to raise the rate a few years back and make a thread asking it's a sackable offense is Through The Looking Glass And Straight Into Clown World territory.

          Imagine how livid they get when the weatherman says it's going to rain tomorrow and it doesn't. #DeathtoBOM

      • USER DC on 04/05/2022 - 15:52
        +6

        I do believe the RBA should have had increased these rates sooner, so that the house price wouldn't have had jacked up so high, and nor would have had cost of living me unaffordable to a lot lot of people.

  • Tomhaigh1 on 04/05/2022 - 12:59
    +5

    People shouldn't make buy/sell decisions for property / crypto / stocks based on who said what.

    • Xistn on 04/05/2022 - 13:08
      +2

      BUY MILO!!

    • goms on 05/05/2022 - 08:32

      So what should people base their decision on?

      • Tomhaigh1 on 05/05/2022 - 19:41
        +1

        The ugly raw data.

    • dufflover on 05/05/2022 - 23:51
      +1

      They shouldn't … but the long term state of how the housing market turned into the ponzi scheme it is demonstrates otherwise, and quite evidently something politicians all keep encouraging themselves too.

      The backyard BBQ convo of how many IPs you own :P

  • GG57 on 04/05/2022 - 13:16
    +6

    I'm pretty sure that the Governor of the Reserve Bank makes the announcements (as OP corrected stated). The Governor is not the only person working at the RBA, and does not have the final decision on monetary policy; that responsibility rests with the Board.

  • ihbh on 04/05/2022 - 13:17
    +11

    Should RBA Governor Lowe Resign?

    No, borrowers should take personal responsibility for their actions.

  • iNeed2Pee on 04/05/2022 - 13:18

    He provided misinformation.

    He will get a job at Kayo for sure.

  • Drakesy on 04/05/2022 - 13:19
    +6

    TBH the RBA is one of the few entities that can miss all their KPI's/targets and they'll all get to keep their jobs.

    The RBA hasn't hit their targets for years and undercooked the inflation with projections that never materialised and now they've lost track of it. I think it's time for a change personally.

    Although this reminds me a bit of the current governments deficit projections where they've missed it everytime.

  • capslock on 04/05/2022 - 13:21
    +4

    He's lost all credibility in my view. His past comments have been so wrong that it's almost better that he says nothing at all.

  • SF3 on 04/05/2022 - 13:22

    Trending, people believe in 🔮 … now wants a refund.

  • AustriaBargain on 04/05/2022 - 13:38
    +13

    You guys really expect the entire country to bear the effects of two years of runaway inflation just so you can save a few hundred dollars a year on your investment property mortgage?

  • Jason Genova on 04/05/2022 - 13:55
    +3

    i call him the RBA work experience boy

    worked his way up as an apprentice, has NFI what he's doing

  • Brodo Faggins on 04/05/2022 - 14:16
    +2

    I don't get it….
    We are close to 0% inflation. ZERO. Of course it's possible that they're bound to fluctuate every quarter.
    Doesn't matter what he says she says. You say I don't want to put my entire savings as a deposit and borrow my max lending $1m.

    If rates rise, you pay more. Basic maths.
    We can't control the market. The onus of responsibility is on ourselves to make the best decisions.
    Physically plan for "when shit hits the fan". Because it's not if shit will hit the fan, it's when.
    So don't be stupid and put 5-10% down and think everything will stay the same and be hunkydory just because you decided that it was smart to be balls deep, leveraged to your eyeballs.

    • Jason Genova on 04/05/2022 - 14:20
      +9

      We are close to 0% inflation. ZERO.

      i think youre a little confused. inflation is hovering around 5.1% (really, its probably 15%)

      • Brodo Faggins on 04/05/2022 - 14:23
        +2

        I was trying to make a point but you are right - I should've edited that bit out.

  • plmko on 04/05/2022 - 14:16
    +15

    IMO Lowe didn't go hard enough.

    • Jason Genova on 04/05/2022 - 14:21
      +12

      he cant, scomao said wait until after the election

    • Crow K on 04/05/2022 - 14:31
      +1

      they have the option to alter the rate monthly going forwards, should it come to that. i'd expect a few more before xmas myself (oh no, now that i've said it, i'll lose my job and be sacked if it turns out that my estimate is wrong help meeee)

  • Keplaffintech on 04/05/2022 - 14:23
    +4

    If you took out a loan last year and were afraid of rate rises, you should have fixed your loan. Mr Lowe can't predict the future with 100% accuracy and he isn't accountable for doing so either.

  • Shazam82 on 04/05/2022 - 14:24
    +2

    OP has reasonable point Dr Lowe could have used better words. No one really knows what the market is going to do, it was a silly comment from someone that should have known better. His comments influence markets and behaviour. Even Dr Lowe admits he made a mistake:

    Reserve Bank of Australia governor Philip Lowe has admitted the central bank’s pandemic guidance that interest rates would not rise until at least 2024 was an “embarrassing” error and it “should have done better”.

    https://www.afr.com/policy/economy/lowe-admits-embarrassing-…

  • EightImmortals on 04/05/2022 - 14:33
    +11

    "Less then a year ago Dr Lowe publicly announced interest rises wouldn't rise any earlier then 2024…"

    And people believed him?
    Good grief.
    One only had to look at the total cluster***k that is the world economy to know there was no way rates were going to stay that low for much longer. More to come yet.

    • pharkurnell on 04/05/2022 - 14:37

      Bingo!!!

      You win the internet + the moon! :)

      • EightImmortals on 04/05/2022 - 14:51

        Wait what? Where's all the usual negs? (Now I'm nervous…..)

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