The RBA is floundering around on monetary policy at the worst-possible time for Governor Philip Lowe. This week's hike and shift to a more-hawkish stance caught the market off-guard.
It also underscored that the RBA was slower to act than it could have been and that will prolong the pain of higher rates. Talk of an impending recession is also high in Australia, putting pressure on politicians to find a scapegoat.
Lowe's term is set to end on Sept 17 but the government would need to act considerably earlier to find a replacement.
Today, the Sydney Morning Herald reports:
Within the government, there are now open questions about Lowe’s long-term tenure at the bank. The previous two governors, Glenn Stevens and Ian Macfarlane, both had their terms extended by three years. But with a sweeping review of the central bank due to be finalised and handed to Treasurer Jim Chalmers in late March, there is a growing expectation that Lowe will not stay on beyond September.
Lowe fell into the same trap as other central banks as he promised to keep rates pinned until 2024. He held onto that stance far too long and has been scrambling since.
