The federal government has defended the Reserve Bank of Australia’s (RBA) efforts to combat inflation despite calls for the central bank’s governor to resign.
Greens senator Nick McKim has been calling for RBA governor Philip Lowe to resign because the central bank boss said interest rates would not start rising until 2024.
However, the RBA has been lifting rates since May in an effort to tame inflation, including a 50 basis points hike on Tuesday
Nationals senator Matt Canavan also wants new leadership at the RBA to restore trust in the institution.
“The current governor has hurt the RBA’s credibility by promising one thing and then doing another,” he told AAP.
However, Finance Minister Katy Gallagher defended the bank’s conduct and said the RBA governor had a “very, very difficult role”.
“We have got this increasing inflation, they’re trying to manage that,” Senator Gallagher said.
“And I think it’s a real balance that they have to play between the decisions they take each month. I don’t think it’s easy.”
She also pointed to the independent review of the central bank already under way.
“That’s making sure that the RBA is fit for purpose,” she said.
She expects to see results from the review early next year.
With rising interest rates and soaring inflation eating into household budgets, the opposition has been calling for the government to come up with a plan to alleviate the cost of living.
Prime Minister Anthony Albanese said there would be some cost-of-living relief in the budget but the government was unable to fund everything it would like to.
“We’ve inherited $1 trillion of Liberal Party debt. When the interest rate rises, so do the repayment costs of that Liberal Party debt,” he told reporters in Canberra on Wednesday.
Meanwhile, national accounts figures for the June quarter are set to be released by the Australian Bureau of Statistics on Wednesday.
St George economists are forecasting growth to rise by 1.1 per cent in the quarter, for annual growth of 3.6 per cent.
CommSec economist Ryan Felsman is expecting a quarterly gain of 0.8 per cent and a rise of 3.3 per cent over the year.
Despite the central bank embarking on a monetary policy tightening cycle in June, ANZ senior economist Felicity Emmett said the economy had considerable momentum in the second quarter.
“Inflationary pressures remain intense, and although growth in average wages has slowed from the first quarter it is clearly trending higher and shows that the tight labour market is feeding through more quickly into wages than the wage price index suggests,” Ms Emmett said.
ANZ economists also expect gross domestic product to have increased by 0.8 per cent in the three months to June.
By Poppy Johnston in Canberra
