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Posted: 2022-11-08 18:00:00

Reserve Bank Governor Philip Lowe is getting terrible press, most of it undeserved.

"Lowe Blow" and "Take a Hike" were two of the headlines on the front page of one of our newspapers. "We've had our Phil" was on the front page of another.

His critics — the ones complaining about continual increases in interest rates — seemed happy enough when he was keeping them low.

Lowe and his board are pushing up rates at almost the fastest pace on record, for the same reason they cut them to the lowest level on record — to try to get the economy back into some sort of balance.

It's tough. But it has been done before, and it worked.

In fact, the man who pushed rates down then up even more aggressively than we're seeing now, former RBA Governor Bernie Fraser, told me this week he approves of the way Lowe is doing his job — with just one exception.

How Lowe's low rates saved jobs

When COVID hit in 2020, at a time when the Reserve Bank's cash rate was already a then-record low of 0.75 per cent, the bank cut to what Lowe described as the "effective lower bound" of 0.25 per cent, before cutting again to 0.1 per cent, and offering banks near-free loans at 0.1 per cent.

Lowe's promise to buy as many government bonds as were needed to push the three-year bond rate down to 0.1 per cent drove three-year fixed-rate mortgages below 2 per cent. Variable-rate mortgages slid to 2.5 per cent.

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