'Litany of failures': Reserve Bank governor grilled over rate hikes, rejects calls for his resignation

Reserve Bank governor Philip Lowe said it was "a bit unfair" he has been a primary target of rate hike criticism when decisions to adjust them are made "collectively".

Reserve Bank of Australia governor Philip Lowe was grilled before a Senate inquiry on Wednesday after nine straight cash rate rises. Source: AAP / Mick Tsikas

KEY POINTS:

• RBA governor Philip Lowe has labelled soaring interest rates a "collective decision".
• Mr Lowe has rejected calls for his resignation.
• The governor also defended a controversial lunch with bond traders, but said he won't repeat it.

Reserve Bank of Australia (RBA) governor Philip Lowe has rejected calls to resign, labelling nine successive interest rises hitting mortgage owners as a "collective responsibility".

The RBA boss appeared before Senate estimates on Wednesday, also insisting there was "nothing untoward" about a controversial meeting with bank traders just after the latest rate hike earlier this month.

Mortgage owners were hit by Australia's ninth consecutive monthly interest rate rise, with research by Finder showing one in five homeowners reporting they believed they had borrowed too much to secure their property.

Greens Senator Nick McKim outlined what he termed a "litany of failures" by Mr Lowe, including a 2021 prediction that the cash rate would steady until "at least 2024".

Interest rate hikes have hit mortgage holders. Source: AAP / Diego Fedele

Senator McKim has repeatedly called for the Mr Lowe's resignation, claiming the prediction had left home-buyers exposed to rising mortgages.

"Then you later apologised if people had listened to you. Since you made that statement, you've put up interest rates nine times in a row and flagged there are more to come," he said.

"You seem prepared to smash all into a recession by trying to squash demand in response to inflation ... Can you explain to the renters and mortgage holders of Australia why you deserve to keep your job?"

Mr Lowe declared his intention to serve out his full seven-year term, set to expire in September, insisting decisions on rate rising were made by all RBA board members.

"I find sometimes that it's all [put] down to me and that's a bit unfair because ... there are nine of us [on the board] who make these decisions, and we take them collectively," he said.

"Inflation at the moment - 7.8 per cent - is way too high. It needs to come down. That's our primary consideration."

RBA governor Philip Lowe predicted in 2021 that the cash rate would steady until "at least 2024". Source: AAP / Joel Carrett

The governor said a major factor in rising rent prices was a low vacancy rate, and flatly rejected suggestions he was seeking a recession

"That's not our intention. We are trying to navigate a narrow path here," he said.

"We want to get inflation down because it's dangerous, it's corrosive, it hurts people, it damages income inequality, and if it stays high it leads to higher interest rates and more unemployment."

'Nothing untoward'

The RBA boss was also pressed on reports in the Australian Financial Review that he briefed traders from Australia's major banks on Saturday, just two days after the latest rate rise.

Mr Lowe insisted there was "nothing untoward" about the meeting, but said he will not repeat it.

The meeting, held at investment firm Barrenjoey, coincided with a sell-off in bonds yields.

Mr Lowe insisted his role required him to meet with a range of people including politicians, journalists and traders, but conceded "many people have [been] concerned" over the timing.

He said he accepted the invitation because he had a "gap in his diary" and wanted to hear what key players in the market were thinking.

"We're responding [to the concern] … and we'll no longer do those types of lunches before the release of the statement on monetary policy," he said.

"[But] there's nothing untoward here. It's appropriate. I can't live in a bubble. I need to talk to people."

Senator McKim pressed the governor on why the bond market "pumped up ... so markedly while you were at that lunch".

Greens Senator Nick McKim has repeatedly called for the governor's resignation. Source: AAP

Mr Lowe said the rise in bond yields began roughly 50 minutes before he spoke at the meeting.

He claimed he had spoken "much more expansively today" than during the lunch, where he said he had sought the traders' views on a "range of issues".

"I push back on the proposition that I shared things with them that I'm not sharing here, or with the Australian people ... [but] if I'd had my time again, I'd do things differently," he said.

Mr Lowe also appeared to criticise attendees at the lunch who may have leaked details to the media.

"For many, many years, we've been able to have these in other meetings with the understanding that people in the meeting don't run to the press straight afterwards," he said.

"If you're meeting with me, you want to have confidence that I'm not going to go to the press or tell other people what you've said. I expect the same courtesy."