Greens Call on Treasurer to Lower Interest Rates by Exercising Powers

Treasurer Jim Chalmers’ efforts to reform the Reserve Bank of Australia (RBA) have faced another obstacle. The Greens party is insisting that the government mandate the central bank to lower interest rates.

The Greens’ economic spokesperson Nick McKim declared that the party would not support the legislation until interest rates are decreased. He urged Chalmers to utilize the government’s reserve powers to enforce a reduction if the RBA board does not take action.

The RBA is set to announce interest rates on Sept. 24. The push to cut interest rates grew stronger after the U.S. Federal Reserve opted to lower them by half a percentage point on Sept. 18. Several key central banks, including those in Canada, the UK, the EU, and New Zealand, have also been decreasing their official interest rates since last year.

In response to the Greens’ stance, Finance Minister Katy Gallagher criticized the party, calling their proposal economically irresponsible.

McKim countered, stating that it is not the Greens, but rather the housing crisis in Australia that is spiraling out of control.

Earlier, the Greens argued that a proposed 25 basis points cut could lead to monthly savings of around $100 (US$68) on an average mortgage of $641,000, amounting to yearly savings of $1,200.

The Greens asserted that the RBA’s decisions have political implications that affect all Australians.

“Part of this modernization of the Reserve Bank necessitates dispelling the notion that the RBA is independent and ‘above politics.’ Members of Parliament, including the treasurer and shadow treasurer, should have the ability to discuss, critique, oppose, or endorse the actions of the RBA,” the Greens’ statement expressed.

They added that if interest rates are slashed, they would back the treasurer’s legislation for restructuring the RBA as long as two key provisions are retained: the treasurer’s authority to override RBA decisions and the RBA’s ability to allocate funds to productive economic sectors.

During a press briefing on Sept. 9, Chalmers mentioned that he is willing to engage in negotiations with the Greens to secure the passage of the RBA reforms through the Senate after the Coalition declined to support the bill due to concerns about board manipulation.

Chalmers mentioned his preference for bipartisan endorsement, but he is now open to exploring all avenues.

“We’ll weigh our options. All possibilities are on the table, but my preference remains unchanged. I would prefer bipartisan consensus in the Senate.”