Lesson in seizing the high ground from RBA governor

Reserve Bank governor Philip Lowe on Wednesday. Picture: AAP

Phil Lowe was well prepared for combat on Wednesday when he gave as good an account as he could for the reasons he is pushing mortgagees to the wall.

It will come as cold comfort to anyone who is hoping the interest rate rocket is going to land anytime soon.

“Inflation is way too high,” he bluntly told a senate estimates committee in his first public outing since pushing the button on last week’s ninth interest rate rise.

“It must come down.”

Declining to give an opening statement in his grilling, the central bank boss said he was simply there to answer questions.

With the spotlight on him, he suggested there was more than enough commentary from others to fill the space.

He took issue with the suggestion that he was deliberately setting out to smash the Australian economy with the cash rate sledge hammer.

But he is clearly feeling the heat.

Lowe carefully avoided his own commentary on whether the government was doing enough from a fiscal setting to help bring down inflation.

The description of a “neutral” impact suggested that the government was neither adding significantly to the inflation curve but nor was it engaged in actively bringing it down.

Bizarrely, he urged people not to blame him alone for rate rises. While criticism of the bank’s performance wasn’t unfair, after all it was a free world, he said, what was unfair was that he alone should be copping the backlash.

He said there were nine people on the RBA board who made a collective decision.

It was an odd defence for the central bank figurehead but one Treasury secretary Steven Kennedy also mounted in his earlier session before the Senate inquisitors. He sits on the RBA board as well.

“The fact it’s often sheeted home to me is a bit unfair … it’s not just me making these decisions,” he said in response to questions, including one from Greens senator Nick McKim, who asked why Lowe shouldn’t sack himself.

“Because it’s the board there are nine of us including Michelle (sitting next to him in the committee room) who make these decisions. And we take them collectively. It’s not just me making these decisions. There are nine people based on the advice of a large staff.

“So, that’s the world we operate in,” Lowe said. “I’m not complaining about it. That’s our job to try and contain inflation. And I’ve got to convince the community that we’re serious about that. That’s our job and it’s unpopular. And I accept that.”

He said it was easier for him to be unpopular than it was for a politician.

But he wasn’t an economic automaton making decisions in a vacuum absent of the human toll.

Lowe said he received letters from people telling him of their hardship. He suggested that he had even read some of them.

“We recognise it’s really difficult if you have a mortgage … I get a lot of people writing to me at the moment … it’s really tough and I understand that … I hear those stories with a very heavy heart,” he told the committee.

“People are really hurting and I understand that … but if we don’t get on top of inflation it will mean higher interest rates and unemployment.”

And so, the pain must go on.