THE SQUIZ
Reserve Bank Governor Philip Lowe backed the big banks’ big profits and confirmed Australia’s set for an unknown number of future rate hikes during his appearance at the Senate Estimates committee hearing yesterday. Lowe’s been under pressure to explain the rationale behind our 9 consecutive interest rate rises – yesterday, he said they’re trying to mitigate the “corrosive” risk that high inflation poses to the economy. “All the evidence is if inflation stays high for too long, expectations adjust and that leads to higher interest rates and more unemployment,” he said. Inflation is currently “way too high” at 7.8% – well above the 2-3% the Reserve Bank wants to see in more stable economic times.

WHAT ELSE WAS SAID?
The short answer: quite a lot, and there’ll be more when he fronts up for another committee hearing tomorrow… Lowe – who’s been criticised for saying Oz wouldn’t see rate rises until 2024 – said he has no plans to resign after politicians grilled him on why he deserves to keep his job. He said the personal criticism was “a bit unfair”, adding that he knows the rate hikes – which have brought the cash rate from 0.1% to 3.35% since May 2022 – are “unpopular”. He said people had contacted him personally to share how they’ve been affected, and he understands “it’s really, really tough”. As for the banks, Lowe said he supported Treasurer Jim Chalmers launching an inquiry into financial institutions’ delayed passing on of rate rises to savings and deposit accounts… But we won’t see the results of that probe for a while, with the Australian Competition and Consumer Commission given a December deadline.

THAT’S GREAT, BUT WHAT DOES IT MEAN FOR ME?
Long story short, if you’ve got a mortgage, rent a home, or pay for electricity/gas, you’re looking at further hits to your hip pocket this year. Treasury Secretary Steven Kennedy was also before the committee yesterday – he said that inflation had most likely peaked late last year, but demand for energy and housing would keep their prices high. In a sign Aussies are feeling the pinch, the latest retail data shows that although spending is down overall, consumers are still hunting for a bargain… Budget-friendly retailers like Kmart Group (which owns Kmart and Target) and Bunnings yesterday said people are looking for value. And although many of us are trimming our budgets, reports say we still want a “feel-good treat” like lipstick and mascara. Go on, then…