Anthony Albanese has created an unpleasant precedent for himself after speaking with Neil Mitchell in Melbourne yesterday.
Prodded by Mitchell about the impact of interest rate rises and the likelihood of many more rate rises to come, the prime minister noted that “the Reserve Bank sets these rates independently of government”.
Perfectly correct — and he should have left it there. But he went on to suggest that if more extreme finance sector forecasts of four rate rises come to pass, “that would place real pressure on people”.
That’s a statement of the obvious, but borders on suggesting that the RBA would be wrong to do it. Then he went further.
Of course, the Reserve Bank will make its decisions based upon their assessment of where the economy is at. But they need to be careful that they don’t overreach as well.
That too is a rather anodyne statement. Heck, we should all be careful not to overreach, on anything. Who among us has not overreached at one time or another? Overreach is never good. But he has now set up a question for himself from journalists in the future, one to be asked after each rate rise from now on: “Do you think the RBA has overreached?”
It’s his word, one he chose to use, not one suggested by a journalist or interviewer. So it’s reasonable for the media to ask in the future about his view on it. And it’s a fairly subjective issue — an inflation dove’s overreach is a hawk’s underreach. In future press conferences, there could be more reaching than a Lee Child novel.
It could also be viewed as a subtle form of pressure on the RBA. What will the government do if the bank “overreaches” — especially while the bank is being reviewed?
It’s a problem politicians haven’t had to contend with for more than a decade: being asked to reflect on the RBA’s decisions to tighten monetary policy. But Albanese himself was a senior member of the past government that faced rising interest rates, back when the mining investment boom and the recovery from the financial crisis saw seven 0.25% rate rises in just over a year between 2009 and 2010. Statements of the bleeding obvious don’t merely hold the potential to undermine the RBA’s independence, they can create a rod for your back down the track. Best not to overreach on that front.
