Call for Jim Chalmers to OVERRULE the Reserve Bank and stop rate hike even though inflation is still too high: ‘Getting out of control’
- Greens Senator Nick McKim outraged by rate hike
- Said tenants and mortgagees are being crushed
Treasurer Jim Chalmers has been urged by the Greens to halt the latest ‘out of control’ rate hike by overriding the Reserve Bank’s decision.
The RBA surprised most pundits on Tuesday afternoon by raising interest rates by 0.25 percentage points, pushing cash rates to an 11-year high of 3.85 percent.
“Inflation in Australia has peaked but is still too high at 7 percent and will take some time to get back into target range,” said RBA Governor Philip Lowe.
But Greens Treasury spokesman Senator Nick McKim was outraged by the announcement, saying it “beyond belief and will crush tenants and mortgagees even harder than they were already crushed.”
“The RBA is out of control. Treasurer Jim Chalmers must use the powers he has and step in and override this decision.”
Treasurer Jim Chalmers (pictured right, with his wife Laura) has been urged by the Greens to halt the latest ‘out of control’ rate hike by reversing the Reserve Bank’s decision
Mr McKim said section 11 of the RBA Act allowed Mr Chalmers if he wanted to.
“If Grim Jim Chalmers refuses to act, it will be tacit approval from the RBA crushing tenants and mortgagees,” he said.
How loan repayments have increased in a year
$500,000: Monthly, $1,041; $12,492 annually
$600,000: Monthly, $1,249; $14,988 annually
$700,000: Monthly, $1,457; $17,484 annually
$800,000: Monthly, $1,665; $19,980 annually
$900,000: Monthly, $1,874; $22,488 annually
$1,000,000: Monthly, $2,082; $24,984 annually
The Greens have drafted a private member bill in federal parliament that, it claims, will strengthen the existing safeguard that gives the treasurer the power to override the RBA.
“Next week’s budget should now be the frontline for tackling high inflation and the cost-of-living crisis,” McKim said.
“But instead Jim Chalmers seems poised to shift responsibility back to the RBA and give a budget that tinkers with margins to avoid upsetting Labour’s big business partners.”
The Reserve Bank Act of 1959 gives the government the power to reverse interest rate decisions, but it has never been used.
An RBA review recommended deletion of this provision, which Dr. Chalmers agreed to.
“We don’t want any element of politicization when it comes to the Reserve Bank,” the treasurer said last month.
And the changes recommended by the review panel are about making the Reserve Bank more independent, not less, but also where there are areas where that’s unclear, to clarify that.
“We intend to introduce legislation to strengthen the independence of the Reserve Bank by removing the government’s veto power over its decisions.”
Dr. Chalmers said on Tuesday that the latest rate hike is “a very difficult decision for many Australians under the pump”.
“This reminds us that inflation remains the main challenge in our economy.”
However, Senator McKim called on Mr. Chalmers to turn the budget into one “that taxes the super-profits of companies that drive inflation and that taxes the wealthy who benefit from high interest rates and low rental vacancy rates.”
He added that “the past 12 months have only shown that we need more oversight and accountability from the Reserve Bank, not less.”
Dr. Lowe explained the reason behind the rate hike saying, “High inflation makes people’s lives difficult and harms the functioning of the economy.
Greens Treasury spokesman, Senator Nick McKim (pictured), said the rate hike “is shaking faith and will crush tenants and mortgage holders even harder than they were already crushed”
And if high inflation were to take root in people’s expectations, it would be very expensive to reduce later, with even higher interest rates and a bigger rise in unemployment.
“Today’s further interest rate adjustment will help with that.”
What the latest interest rate hike means for mortgage repayments
$500,000: $79 up to $2,963 from $2,884
$600,000: $95 up to $3,555 from $3,460
$700,000: $111 up to $4,148 from $4,037
$800,000: $127 up to $4,740 from $4,613
$900,000: $143 up to $5,333 from $5,190
$1,000,000: $158 up to $5,925 from $5,767