RBA governor Michele Bullock has put her foot in her mouth – again.
There is nothing to doubt her competence, but her tact and messaging threatens to undermine her governorship only three months into the job.
Saying the most aggressive series of rate hikes since the late 1980s is creating “a lot of political noise and a lot of noise from the general public” reeks of an out-of-touch central banker shaking her head at the fickle and irrational emotions of the great unwashed masses.
Especially when she follows that observation up with “despite that noise, households and businesses in Australia are actually in a pretty good position”.
Tell that to the as many as one-in-eight mortgaged households who don’t have enough left in their paypackets after loan repayments to pay their bills.
And that’s based on the RBA’s own research!
Remember that it was only in June that Ms Bullock, as deputy governor, earned the ire of unions when she said unemployment was too low and “will have to rise” to bring inflation under control.
Technically true, but, good God, there are better ways to say it.
One issue is that the central bank can only mouth platitudes to this growing minority of struggling families who are being crucified by cost of living pressures and interest rate hikes.
The central bank understands the impact of rate hikes does not fall evenly on the community, to put it nicely.
But as Bullock said last week, the RBA has one blunt tool, and it needs to set interest rates to “serve the welfare of Australians collectively”.
In other words, the bank necessarily looks at averages and aggregates when assessing the economy and setting monetary policy, and can’t apologise for pursuing its mandate.
We don’t want our central bankers to be politicians, and we should cherish their honesty and independence of thought.
But the RBA governor cannot be seen as dismissive of the anger and pain felt by Australian families.
People are already “very unhappy” with the RBA, as Bullock accurately noted during the panel discussion at a Hong Kong conference.
This latest gaffe is not helping at a time when the bank desperately needs to get its messaging exactly right.
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