Bank on me: Philip Lowe sings his own praises

RBA governor Philip Lowe has hit back at calls for him to step down, saying he has ‘no plans to resign’.

‘I’m not going anywhere’ … a defiant RBA governor Philip Lowe at the Anika Foundation in Sydney on Thursday. Picture: NewsWire / Monique Harmer

RBA governor Philip Lowe has hit back at calls for him to step down, saying he has “no plans to resign” and that an economy near or at full employment for the first time in 50 years is the “legacy” of the decisions the central bank board took through the pandemic.

In a speech to the Anika Foundation in Sydney, Dr Lowe said the RBA got its inflation forecast this year very wrong, and that this had led to some “soul searching” at the bank.

Greens senator Nick McKim, Nationals senator Matt Canavan and leading economist Warren Hogan have all called for Dr Lowe’s head, accusing him of breaking trust with the public by delivering a string of five consecutive rate increases, despite saying late last year he did not expect a rise until 2024.

But in a question-and-answer session following Thursday’s speech, Dr Lowe was defiant. “I can assure you I have no plans to resign,” he said. “What I would point out to people is the unemployment rate in Australia today is the lowest in 50 years. Female labour force participation is at a record high. And Australians can get jobs in a way that they haven’t been able to do before.

“That is a huge economic and social benefit. We’ve struggled for 50 years to get to full employment. It has been, from my perspective, a blight on what’s otherwise been a very successful economy. We’re closer to full employment maybe there than we’ve ever been in 50 years. So that is a legacy of what we’ve done.”

Consumer price growth is at a 30-year high of 6.1 per cent, and the RBA expects that it will approach a peak of 8 per cent by the end of this year, before easing in 2023.

“We’ve certainly got higher inflation, and that’s partly because of the insurance policy we took out during the pandemic,” Dr Lowe said.

He said that during the pandemic, the central bank board decided – in the context of dire warnings of tens of thousands of Covid deaths, overwhelmed hospitals, and 15 per cent unemployment – that it was better to err on the side of too much stimulus.

The RBA governor said the judgment was made that by doing too little, “the economy (and) our society would have paid a very heavy cost”.

“If we did too much, then we’d have to increase interest rates and I’d get all this criticism and calls for my resignation,” he said.

“In the end, different people have different judgments, but I think we made the right choice.

“We provided the society with insurance based on the health advice that we had. Turns out we didn’t need as much insurance and we’re having to increase interest rates.

“But people have jobs. Kids have opportunity. Household income is rising. That’s what I would say to people who don’t like me in my job.”