RBA: apologises for interest rate guidance

AFR

Lowe apologises for interest rate guidance

Reserve Bank governor Philip Lowe has offered an unprecedented apology to Australians who took out home loans based on the central bank’s failed guidance that interest rates were unlikely to rise until 2024.

Throughout 2021, the Reserve Bank board and Dr Lowe said they did not expect the conditions for a rate rise, like higher wages growth and a tighter labour market, to be met “until 2024 at the earliest”.

Dr Lowe repeated the guidance as late as November 2021.

While Dr Lowe has previously defended his statements on the basis they included caveats, the central bank has faced criticism from across the political spectrum after it dumped the guidance and pivoted to an aggressive rate hiking cycle in May 2022.

Asked by Greens Treasury spokesman Nick McKim on Monday morning whether he owed Australians who were “induced” into taking out mortgages on the basis of the guidance an apology, Dr Lowe said he was sorry.

“Well, I’m certainly sorry if people listen to what we’d said and then acted on … what we said, and now regret what they have done,” Dr Lowe told the Senate economics committee.

“So that’s that’s regrettable. I’m sorry that that happened. I’m certainly sorry if people listen to what we’d said and then acted on that.”

Interest ratesPhilip Lowe