RBA’s Lowe adds CBA, Triguboff along with Barrenjoey to week of private meetings

The private meetings of the central bank boss are under scrutiny including a lunch with bond traders in the days following the February’s ‘hawkish’ rate move.

The RBA and Philip Lowe in particular have come under fire following a year of rapid monetary policy tightening, designed to slow the economy in the face of an inflation breakout. Picture: Bloomberg

Reserve Bank governor Philip Lowe held private meetings with billionaire property developer Harry Triguboff and Commonwealth Bank boss Matt Comyn in addition to a lunch with investment bank Barrenjoey, all in the same week of February’s interest rate hike.

While Lowe regularly talks to business leaders, the Barrenjoey meeting in early February came under intense scrutiny. The bank had surprised many when it returned from the summer break and took a much more aggressive position towards the outlook for future interest rate rises.

The three meetings were held after the rate hike document was released but before the RBA’s Statement on Monetary Policy, or SoMP, was unveiled that same week. The quarterly statement contains the full thinking behind the RBA’s key economic forecasts as well as its outlook for the cash rate. Indeed, the February SoMP made some important tweaks around some of the mechanics that had shaped the forecasts on inflation.

The Reserve Bank hiked the cash rate to 3.6 per cent this month. Picture: AAP Image

The lunch briefings with Barrenjoey, which included some of the firm’s clients, came to light last month, although the meetings with Meriton’s Triguboff and CBA’s Comyn that week had not been revealed.

With the pace of the rate rises and February’s sudden shift, Lowe is battling the optics of the private meetings, which also took place before he was due to front two parliamentary committees and take questions on the health of the economy.

The central bank and Lowe in particular have come under fire following a year of rapid monetary policy tightening, designed to slow the economy in the face of an inflation breakout.

The Albanese government has been keen to distance itself as much as possible from the successive rate hikes, creating a vacuum that has often left the RBA to defend itself.

The bank has also been the subject of easy political attacks as homeowners come to grips with surging mortgage repayments at the same time that they are grappling with inflation.

Since taking on the top job, Lowe delivered a major outlook speech after the first RBA board meeting of the year, to provide context around the RBA’s thinking. However, this year he opted against it, given he had the two parliamentary appointments scheduled for the middle of the month.

Commonwealth Bank chief executive Matt Comyn.

The RBA board meeting and rate hike took place on February 7, a Tuesday. The CBA meeting took place at the RBA headquarters on February 8, while the Meriton and Barrenjoey meetings both took place on February 9. The SoMP was released on February 10.

The next week Lowe appeared before the Senate estimates committee on February 15 and the House of Representatives economics committee two days later.

Lowe often meets with the bosses of the big banks, with the frequency increasing during the Covid pandemic. It is understood the central bank governor is keen to seek insights from the banks directly about how their customers are reacting to economic swings.

CBA is the nation’s biggest lender and in addition to millions of mortgage customers, it has access to real time payments information covering a vast chunk of the economy. Lowe’s meeting with Triguboff, meanwhile, marked the fifth catch-up between the two in less than 12 months. Meriton ranks as Australia’s biggest developer of apartments.

A spokeswoman for the RBA declined to comment. However, she noted the RBA governor addressed the subject of his private meetings when he fronted both Senate and House of Representative economics committees. CBA declined to comment, as did Triguboff’s Meriton.

Last month Lowe said he had taken feedback around speaking at private forums before the Statement on Monetary Policy was released. The Barrenjoey lunch at the stockbroker’s Sydney office involved dozens of attendees, while the other two were informal conversations. It is standard practice of the central bank’s senior staff to go into “blackout” in the week before the scheduled board meeting.

Meriton founder Harry Triguboff is one of the biggest apartment developers in Australia and has regular meetings with the central bank. Picture: John Appleyard

Even so, Lowe said he intended to continue to talk to the private sector and feels strongly about this. “We can’t live in a bubble in our building in Martin Place. We’ve got to talk to people. We’ve got to hear what they’ve got to say. I like asking people questions as well. We’ve got to keep doing that,” Lowe told the House committee.

Lowe’s RBA board this week issued its tenth interest rate hike in as many months, but shifted the bank’s footing again by giving the first indication that cash rates were nearing their peak in the current cycle. The 25 basis point move took the cash rate to 3.6 per cent.

The next morning Lowe delivered a speech and took questions at a business forum in Sydney, where he signalled that the central bank was close to a pause in rate hikes. His appearance was broadcast live over the RBA’s website.

Myer’s turnaround

As Myer’s John King approaches five years in the top job, the British retailing boss has pulled the department store off a path of inevitable decline and given it a taste of success again.

Even in the face of boardroom stresses of recent years, King today runs a retailer that has all the hallmarks of management stability and a determined plan.

Myer is outwardly confident without the swagger. It has shifted from debt to generating cash, and has a well-developed strategy in place to meet the looming economic slowdown.

Every one of Myer’s stores has been refreshed and is making money again. There is a considered loyalty strategy and more aggressive management of inventory. Adding to the swing back to Myer is the massive distraction faced by competitor David Jones, which faced a drawn-out, low-ball sale to private equity after heavy losses.

Myer CEO John King

It has been a stunning revival overseen by the low-profile King, and the British national now needs to start laying plans for his eventual exit to ensure Myer stays on its new path. The Myer boss says he is not going anywhere yet and he is focused on developing future leaders.

He says there is plenty more opportunity to come from the department store through his multi-year Customer First strategy – a program that has no end date.

“We have an expression here: lots done, loads to do,” King says in an interview.

Myer’s turnaround has come about by getting the basics right. The strategy has been as much about the balance sheet as well as better retailing. There have been some painful store closures without compromising the sales network. Smaller store sizes have boosted the sales productivity and there has been an overhaul of product mix. David Jones’ woes allowed Myer to secure a distribution deal for sought-after Country Road brands. At the same time there has been a massive investment into building out Myer’s online offering, while the MyerOne loyalty scheme, with more than seven million members, is the glue that holds it all together.

“It’s just a combination of a lot of hard work and a real laser focus on the customer, and how we can do things better for them all the time,” King says.

King on Thursday delivered Myer’s strongest sales results since it relisted in 2009 with first-half sales surging 24 per cent, helping to deliver an interim net profit of $65m, at the top end of ­expectations.

And in a sign of that confidence Myer’s board declared a massive 8c a share interim dividend, including a 4c special dividend. This continues the shareholder returns under King, that restarted last year after a five-year freeze. The total payout represents the biggest dividend paid by Myer in nine years. No wonder Myer’s shares rocketed 18 per cent on Thursday and busted through the $1-mark for the first time in years, pushing it closer to becoming a $1bn company and getting back on the radar of big investors. Myer shares have been one of the strongest performers so far this calendar on the ASX 300, with its shares up more than 60 per cent. Not bad for a retailer facing an economy where consumer confidence has crashed on soaring interest rates.

Myer's Pitt Street Mall store in Sydney. The retailer is paying dividends again. Picture: AAP

King says the next six months will be when his MyerOne loyalty scheme comes into its own and this will be the key to navigating a tougher consumer market. Currently a record of just over 73 per cent of purchases use a MyerOne card, delivering a massive insight into its customer base. The average MyerOne customer spend is 82 per cent higher than a non-card holder. The size of the program makes it lucrative for brands to offer discounts and customers use points accumulated to pay for purchases, which offsets rising prices elsewhere. King, who has gone through deep recessions back home, is cautious about the outlook but says Myer is well placed. Sales are up 16 per cent since the start of the year.

A big part of the Myer story in recent years has been billionaire retailer Solomon Lew’s campaign against the Myer board. Using the creep provisions Lew has now amassed more than 25 per cent and has a representative on the board, suggesting that peace is coming. Lew’s determination has been dogged and brutal, but forced Myer to become a better retailer.

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Originally published as RBA’s Lowe adds CBA, Triguboff along with Barrenjoey to week of private meetings