Recently, Dr Philip Lowe, the Governor of the Reserve Bank of Australia (RBA), has sparked debate and outrage with his idea on how to handle rising interest rates – work more and spend less.
The 61-year-old economist had previously been labelled “out of touch” when it was revealed that he purchased his five-bedroom home in Randwick, Sydney at the heavily discounted price of $1.075m in 1997, with the help of a taxpayer-subsidised mortgage.
The RBA spokesperson has since made it clear that Dr Lowe has repaid his loans and does not currently have a borrowing facility with the RBA.
Under Dr Lowe’s advice, homeowners have been urged to cut back spending and ‘find additional hours of work’ in order to be put into a ‘positive cash flow position’. He has also noted that many homeowners are doing well and ‘having to cut back on spending’. Such advice has been met with criticism, particularly from those who have already taken on second jobs and are struggling to keep up with the rising costs.
Furthermore, Dr Lowe has suggested that younger Australians move back home or get a flatmate to help economise on housing, while prices continue to rise. Such ideas have only served to further fuel the debate on whether Dr Lowe is out of touch with the experience and suffering of the average Australian.
The RBA has one lever and they are yanking it for what it’s worth. Lowering rates almost to zero to stimulate the economy didn’t work and raising them to control inflation isn’t working. There needs to be a broader approach by the government.
