Why aren’t they talking? RBA governor’s claims of treasurer’s silence questioned

The RBA and federal treasurer are supposed to have regular discussions about the economy and where interest rates are going, but claims the two ‘haven’t really spoken’ have raised eyebrows.

Treasurer Jim Chalmers has said that he “talks frequently” with Philip Lowe after the Reserve Bank chief’s claim that he “hasn’t really spoken about interest rates” with his government counterpart.

Dr Lowe had raised eyebrows when testifying before the Senate Wednesday when he said

that “The Treasurer and I haven’t really spoken about interest rates.”

“That’s the way we operate. There’s no pressure from the Treasurer, Treasurer Chalmers.”

“It’s noisy, but raising interest rates is always unpopular … it affects the whole community and the representatives of the community, understandably, will sometimes want to talk about that. But we keep doing our job,” he said.

However Dr Chalmers clarified the relationship at a press conference Thursday.

“We talk frequently about the bank itself,” Dr Chalmers said.

“We spoke last night, for example, we speak frequently, nd the point that Governor Lowe was making, which I agree with 100% is that I don’t ring up the Reserve Bank Governor on the morning of a board meeting and say this is the outcome that the government wants.”

According to the RBA’s website, there are supposed to be “frequent formal and informal contacts between the Governor and the Treasurer” to “inform the Australian Government (about) monetary and banking policy.”

Grilled.... Reserve Bank Governor Philip Lowe. Picture: NCA NewsWire / Gary Ramage

Section 11 of the Reserve Bank Act reads, “the Reserve Bank Board is to inform the Government, from time to time, of the Bank’s monetary and banking policy.”

Independent economist Warren Hogan said that if the Treasurer and Mr Lowe were not speaking regularly, “that doesn’t seem like an ideal way to operate.”

“To say they don’t speak is not healthy, and I hope that is not the case,” he said.

Mr Chalmers and the Reserve Bank have been contacted for comment.

Treasurer Jim Chalmers will decide over the governor’s tenure. Picture: NCA NewsWire/Tertius Pickard

Dr Lowe has been under increasing pressure from Labor over a series of interest rate rises, with six ALP MPs publicly questioning his performance last week.

On Monday, Dr Lowe apologised for rate rise saying, ““I’m sorry that people listened to what we said and then acted on that and now find themselves in a position they don’t want to be in.”

“Looking back, we would have chosen different language. People did not hear the caveats. I thought it was clear … but the community didn’t think it was clear. Well, they thought it was clear we weren’t raising rates until 2024. That’s a failure on our part.”

Originally published as Why aren’t they talking? RBA governor’s claims of treasurer’s silence questioned