INTEREST RATES:
The Governor of the Reserve Bank of Australia (RBA), Philip Lowe, says a new method for announcing the bank’s monthly decisions on whether to change or hold the cash rate which flows through to home-loan interest rates will make news of any rises far more palatable for mortgage holders.
“I admit that yesterday’s decision by the Reserve Bank board to lift the cash rate after we kept the rate on hold last month has shocked the financial market and home owners alike,” Mr Lowe said.
“I’ve been think for some time about how we might find a new way to handle the announcement of our monthly decision on the cash rate.
“The upshot is that from June onwards I’ll personally be announcing the board’s decision on live television complete with a live studio audience.
“We’ve already staged some rehearsals (main picture) and I reckon we’re on a winner.”
Mr Lowe said he had crystallised the idea for a new way of announcing interest rate decisions after he and other members of the board were watching reruns of Oprah Winfrey’s former daytime talk show at yesterday’s RBA meeting.
“Every month at our meetings we have a heck of a lot of time to kill,” he explained.
“As soon as each meeting begins, I throw a dart at a special wall chart with three segments labelled ‘hold’, ‘lift’, and ‘drop’ to decide.
“If it’s ‘lift’ or ‘drop’ I then invite one of the board members to step forward to be blindfolded and draw a number – a decimal fraction – from a hat which then becomes the magnitude of any rise or fall in the cash rate.
“On Tuesday, to fill in time before we left the board room after enough time had elapsed to give the impression we’d been hard at it, I treated directors to a stack of Oprah reruns on some old VHS tapes I found at home.
“After that, the new concept for announcing our future decisions was a no-brainer,” Mr Lowe said.
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