Opinion: We thank doctors for their COVID response. Why do we bash Philip Lowe? | Jessica Irvine
The headquarters of Australia’s central bank is an office tower situated directly across from Australia’s oldest hospital. Sydney Hospital, in turn, backs out on to a leafy expanse of grass known as The Domain.
In March 2020, the bank unveiled a four-part plan of attack, including a massive program of government bond buying, a facility to give cheap credit to banks, a commitment to keep the yield payable on three-year government bonds at an ultra-low level and, finally, the explicit use of a little known policy tool – at least in an Australian context – of so-called “forward guidance”.
Lowe has now apologised to borrowers who took out loans thinking they did have his personal assurance rates would not rise until 2024, admitting: “We weren’t clear enough.” But is Lowe really solely to blame? Did the bank set out to deliberately mislead the public about the likely path of future rate rises? A cynic would say so. To the extent people were, indeed, misled and did, in fact, borrow more, this helped prop up house prices and the economy. But I don’t think that was ever the explicit intent of the comments, which were more aimed at wholesale money markets.
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