The Reserve Bank of Australia is expected to leave the national interest rate at the historic low of 0.1 per cent at today’s board meeting, and will likely delay the tapering (reducing its weekly bond buying program) far beyond September.
Despite the relatively bullish tone of the bank in August, Governor Philip Lowe said he doesn’t want to get ahead of the Federal Reserve not to repeat the RBA’s premature interest rate increase after the global financial crisis more than a decade ago.
This time the rosy economic outlook looks even more turned on its head as more and more Australian states are now struggling to keep daily COVID-19 infections under control and continue extending lockdowns affecting all businesses.
On the other side, because the RBA is reluctant to reduce the interest rate any further, it can extend its bond purchases.
Bond purchase under the unconventional policy of quantitative easing, or QE is all about manipulating interest rates which acts in a similar way to interest cuts without actually reducing the nominal rate.
When the RBA buys government bonds, money is flowing from the central bank to individual banks in the economy, increasing the supply of money in circulation.
Thats why it is sometimes called printing money to intentionally increase prices when inflation is “considered” low (RBA governor Philip Lowe’s outdated view of inflation and obsession with it is not a well-kept secret. There is at least some transparency with this).
Rate and Conflict of Interest
The Reserve Bank Board consisting of nine members meets eleven times each year, on the first Tuesday of each month, except January to review the current monetary setting and make a decision.
Monetary policy decisions, including setting the key interest rate directly and indirectly affect a range of market, retail and institutional interest rates, including home loans and property prices.
The current record low interest rates and money-printing have been blamed for the fastest-growing house prices and homelessness around the nation.
So, the RBA board’s accountability and transparency has never been more important.
When it comes to transparency and accountability, the RBA is probably the worst federal entity in Australia - if not the second only to the Treasury.
How if these board members are involved in insider-trading style profit making such as buying investment properties?
Well, nobody knows as there has never been any transparency or proper disclosure.
For example, if you remember the information revealed by the ABC News, the Reserve Bank conspired to pressure private firms and the federal government to hide data from the Australian people about slumping property prices [1][2] and instead the RBA misleadingly talked up the property market in public.
Back in April, we published how Australia’s federal politicians charged with tackling the thorny issue of soaring house prices are keen property investors themselves which obviously raised the question just how willing they are to address the current housing affordability crisis. We also wrote about Aussie politicians who “live off” rental income without owning property.
On April 15, we formally filed a Freedom of Information (FOI) request with the RBA to obtain “information about … the real estate ownership by members of the Reserve Bank Board, including the Governor and Deputy Governor”.
Eventually after many followups, we managed to force the RBA to make partial public disclosures about at least Governor Philip William Lowe and Deputy Governor Guy Debelle on April 30 (funnily, the RBA called it voluntary routine disclosure ) but has since refused to disclose the information about the other seven board members.
As if it wasn’t enough to run a cheap political campaign to mislead the public with “voluntary” and “routine” declarations, the RBA and Treasury still refuse to respond to our requests to release the other board members’ declarations.
We have escalated the matter to the Office of the Australian Information Commissioner and there is an external review underway after both the RBA and Treasury refused to conduct an internal investigation or explain why they can't release investment property data about the board members.
It is not only weird but also makes no sense they are going to all the hassle of hiding the declarations of 7 other board members without any explanation, even though they are aware that this might be in contravention of the FOI Act.
The Freedom of Information Act 1982 (FOI Act) provides a general right of access to information held by the government and other Commonwealth agencies.
The standard timeframe to process an FOI request is 30 days, and agencies must comply with the statutory timeframes for processing FOI requests.
The FOI Act contains a number of extension of time provisions which require informing the applicant that they need more time to process it. This can be another 30 days or a specified timeframe.
We have not been informed of any extension needed in the past 115 days.
We have also in writing requested an internal investigation and received no response.
Not being able to extract information from government entities which talk about transparency and accountability is as tragicomic as the fact that the world’s most sparsely populated nation has the most expensive housing and land on the planet.
On the positive side, we are still optimistic that other board members will at least make “voluntary” declarations soon.
At the end of the day, they don’t have anything to hide, do they? Well, who knows?
However, what is at least known in this country is that the world’s most sparsely populated nation has one of, if not the most expensive housing and land on the planet, forcing most people to spend the best part of their life to pay the banks, rent forever, or live an undeserving life of homelessness and indignity.
