No more Lowe blows: The RBA changes that could make rate calls less personal
Former RBA governor Philip Lowe became a lightning rod for the public's interest rate anger. A series of changes at the central bank aim to put an end to this peculiarly Australian phenomenon.
It took just two months for new Reserve Bank governor Michele Bullock to experience the sharp tongue of the tabloid media when interest rates are increased.
After giving a detailed and carefully worded speech about monetary policy and the future of the central bank at the Australian Business Economists Annual Dinner late last week, Bullock was criticised in the press... for allegedly blaming hairdressers and dentists for driving up inflation and therefore pushing interest rates up by 25 basis points at the RBA's November meeting.
Those who actually listened to the speech found themselves perplexed. Bullock did no such thing. So what did she actually say? She explained that one of the indicators that domestic demand, rather than international factors, is increasingly driving inflation is that the prices of services are growing.
“Hairdressers and dentists, dining out, sporting and other recreational activities – the prices of all these services are rising strongly,” Bullock said. “This reflects domestic economic conditions and is an indication that aggregate demand is sufficiently greater than aggregate supply to sustain these price increases.”
