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Parliamentary committee to probe RBA monetary policy

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Liberal MP Tim Wilson has tipped a parliamentary committee will be quizzing RBA governor Philip Lowe on the central bank’s COVID response and its plans for monetary policy.

Mr Lowe is due to appear for a public hearing with the House of Representatives standing committee on economics on Friday morning.

Mr Wilson, who is chair of the committee, said the RBA’s measures in response to the pandemic would be up for discussion. 

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“We are interested in learning more about the RBA’s plans to support a strong recovery for the Australian economy,” he said.

“There’s never been a more lively time to discuss monetary policy, with reckless proposals for Modern Monetary Theory floated in the media. This hearing will provide a good opportunity for the RBA to outline the shortcomings of such proposals.”

At its August meeting, the RBA board decided to maintain its current policy settings, including the targets for the cash rate and the yield on three-year government bonds of 25 basis points. 

Mr Lowe commented the approach will be “maintained as long as it is required”. 

“The board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band,” the Reserve Bank governor said.

“The Australian economy is going through a very difficult period and is experiencing the biggest contraction since the 1930s. As difficult as this is, the downturn is not as severe as earlier expected and a recovery is now underway in most of Australia. 

“This recovery is, however, likely to be both uneven and bumpy, with the coronavirus outbreak in Victoria having a major effect on the Victorian economy.”

The RBA last fronted the committee in February.

 

Parliamentary committee to probe RBA monetary policy
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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