Economists defend RBA boss Stevens

PRIVATE sector economists have defended embattled RBA governor Glenn Stevens but he has won little support from politicians.

PRIVATE sector economists have quickly defended embattled Reserve Bank governor Glenn Stevens but he has won little support from politicians.

Mr Stevens's testimony to the House of Representatives committee last week, that housing stress was exaggerated and the Reserve Bank had expected private banks to raise rates, has been attacked by politicians and the media. The Daily Telegraph of NSW headlined its Saturday report: "Is this the most useless man in Australia".

BT Financial Group chief economist Chris Caton said yesterday: "Glenn Stevens is highly regarded in the economics fraternity. It would be hard to find anyone to say a bad word about him as a bureaucrat, an economist or a person."

Deutsche Bank chief economist Tony Meer said Mr Stevens was the best prepared and qualified person to lead the Reserve Bank during the difficult process of a slowdown. "We've got a central bank governor saying we have been living beyond our means. No one likes that," Mr Meer said.

Opposition Leader Brendan Nelson continued the attack on Mr Stevens yesterday, saying he believed he had lifted interest rates too far too quickly. He said that while the Reserve Bank board had considered raising rates by half a percentage point, consumer confidence was plunging.

Wayne Swan declined to comment on Mr Stevens's performance but he continued to back the independence of the bank.

"There has long been a bipartisan consensus about the independence of the Reserve Bank that has served Australia well, and we strongly support that continuing," the Treasurer said.

"The fact that Dr Nelson and the Liberals can't decide whether they still support the independence of the Reserve Bank or not shows just how badly the Liberals have lost their way on the economy."
Opposition Treasury spokesman Malcolm Turnbull declined to comment yesterday on Mr Stevens's performance before the committee, of which he is a member.

However the chairman of the committee, Labor backbencher Craig Thomson, described Mr Stevens's testimony as "a bit of a concern". "I asked the question about bank profits, and his answer didn't contain a lot of sympathy for people with mortgages in relation to that," Mr Thomson said. There was "not much joy" in any of the governor's answers on mortgage stress.