Greens push for government intervention on interest rates
The Australian Greens have urged Treasurer Jim Chalmers to step in if the Reserve Bank of Australia (RBA) raises interest rates again this week.
The call comes ahead of the central bank’s next monetary policy decision, expected on Tuesday.
Greens leaders argue that another rate rise would worsen financial pressure on households.
Larissa Waters criticises inflation response
Greens leader Larissa Waters said rising inflation was being driven by global factors, including the escalating conflict in the Middle East.
She argued that increasing interest rates would not solve those issues.
“If the RBA decides to lift rates on Tuesday, the Treasurer must overrule the decision,” Waters said.
Rare legal power cited by Greens
Greens senator Nick McKim pointed to a little-used provision in the Reserve Bank Act, known as section 11, which allows the government to override the central bank in certain circumstances.
He said the treasurer should use that power if the RBA raises rates again.
Higher interest rates would increase mortgage repayments and rental costs, McKim argued.
“Higher mortgages and higher rents will only punish people who had nothing to do with causing this inflation and have no power to fix it,” he said.
Government under pressure before RBA meeting
The debate highlights growing political pressure ahead of the RBA’s decision.
Interest rates have become a central issue in Australia’s cost-of-living crisis, with households facing higher borrowing costs in recent years.
Independence of the central bank
Economists have long emphasised the importance of keeping the RBA independent from political influence.
While the Reserve Bank Act technically allows government intervention, the power has almost never been used.
Treasurers historically avoid using the mechanism because it could undermine confidence in the independence of Australia’s monetary policy.
Decision expected this week
The RBA board is expected to meet this week to decide whether inflation pressures require another interest rate increase.
The outcome could affect mortgages, rents and borrowing costs across the country.