THE SQUIZ
Treasurer Jim Chalmers didn’t take an opportunity yesterday to back Reserve Bank Governor Philip Lowe, adding to speculation that all isn’t well between the Albanese Government and the central bank. Lowe was also in focus on the weekend following a report in the Financial Review (paywall) that said while he didn’t have time to speak to the media after Tuesday’s board meeting to explain the latest interest rate hike, he did attend a private lunch on Thursday to brief traders from the banks. All that makes for a big week ahead for Lowe, who will appear before 2 federal parliamentary committees in Canberra.

WHY IS THIS A THING?
Because even when things are going along nicely in our economy, the Treasurer needs to have a good relationship with the central bank – at the moment, the Australian and global economy is fraught, so confidence is a must. Note: the current focus on Lowe hasn’t come out of the blue… As late as November 2021, he said official interest rates would stay at the record low of 0.1% until at least 2024. Last time we looked, it’s 2023, and the rate is 3.35%… Times change and Lowe has since called it an “embarrassing” error – but many Aussies took out loans based on that advice, and now they’re being squeezed. He’s also copped flack for letting inflation get away and lifting rates later than other economies, amongst other things. So Chalmers not taking the opportunity to back Lowe in yesterday – saying that the “governor operates independently from the government” – is notable at a tricky time. 

WHAT’S NEXT?
On Wednesday, Lowe will appear at Senate Estimates (aka the opportunity for senators to question the bureaucrats). On Friday, he’s back for a House of Reps Economics Committee hearing (aka pollies from the lower house’s opportunity to go hard). And there’s a review of the central bank – the first in 40 years – that will wrap up at the end of March. After that, there’s a decision to be made about whether Lowe’s contract will be extended. His 7-year term is up in September, and while the previous 2 governors got more time, there’s growing speculation Lowe won’t be asked to stay on. As for the task at hand, Chalmers said there are “very encouraging” signs in our economy, like falling power prices. He believes we will avoid a recession, but the conditions ahead are difficult.