Speaking at Senate estimates on Wednesday, Ms Gallagher fielded several questions about the Reserve Bank’s ongoing interest rate hikes and governor Philip Lowe’s abilities.
Despite the barrage of inquiries, Ms Gallagher adeptly deflected them by emphasising the government’s appreciation for the RBA’s autonomy, a sentiment reinforced by Treasurer Jim Chalmers and his assistant Stephen Jones.
However, Ms Gallagher’s poised demeanour was momentarily disrupted by one inquiry: “Does Dr Lowe enjoy the government’s confidence?” To this, she hesitantly whispered, “Yes”, betraying a hint of uncertainty.
Earlier this week, governor Lowe found himself in uncharted waters as news emerged of his meeting with major bank bond traders, coinciding with questionable bond activity.
This meeting occurred merely two days after the RBA’s ninth consecutive monthly increase of the cash rate, amid heated debate about the governor’s capabilities and his future.
The most suspicious aspect of this reportedly intimate lunch was that Dr Lowe broke with tradition to attend, abandoning the annual custom of addressing the public after the first RBA board meeting of the year, a tradition upheld since 2017.
When asked about the lunch, Treasurer Jim Chalmers responded with his often-repeated term “independent”, emphasising that he does not oversee the governor’s schedule or approve his commitments.
“The governor operates independently from the government,” said the Treasurer.
“I suspect that governors before governor Lowe have met with different players in the market. If people have got particular concerns, they’ve got an opportunity to raise them directly with governor Lowe and he can explain.”
Although Dr Lowe’s abilities have been in question for some time, the RBA’s recent interest rate decision has further clouded the waters, causing headaches for Mr Chalmers and adding to the uncertainty.
For quite some time now, Mr Chalmers has frequently associated the word “independent” with the RBA. However, it is this month that the significance of this word gained even greater weight.
What sets this month apart, you may wonder?
Dr Lowe’s hawkish stance has reached unprecedented heights.
In addition to raising rates for the ninth consecutive time, he removed the phrase “not on a pre-set path” from his statement and reinforced that “the board expects” further rate hikes in the coming months.
Rather than calming the markets and signalling the end of the bank’s rate increase journey, Dr Lowe conveyed the sense that it had just begun.
So, has Mr Chalmers been subtly indicating all along that the government harbours its own doubts about Dr Lowe and his decisions?
Does this imply that, similar to the Greens, the Labor party is apprehensive about the governor’s next moves?
Whatever the case, Ms Gallagher’s Senate appearance may do little to alleviate concerns that the RBA may have indeed lost the government’s trust.
Ultimately, I can’t help but wonder, has Dr Lowe fooled us again?
