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RBA01QW van Manen The RBA has previously acknowledged that there is a lag between when monetary policy decisions are made and when the impacts of those decisions begin to be seen. Can the RBA please advise the following:

a. The timing of when the impacts occur and if the RBA does not know this why not?

b. What the quantitative impacts are and whether they are positive or negative for the economy?

c. What are the distributional impacts, who are the winners and losers, and what is the net impact on the economy?
Responses to
questions 1 – 7

(5 April 2023)
van Manen
In the RBA's view is the current rate of inflation accelerating or decelerating?
van Manen
At the 17 February 2023 hearing with the committee, the RBA said that Australia is approaching or has reached full employment. This assumes those currently unemployed
(3.7%) or underemployed (6.9%) have chosen to be so:

a. How does the RBA know this to be the case?

b. Is it reasonable to assume that a significant number of these people are actually involuntarily unemployed or underemployed for reasons including (but not limited to) lack of training, skills, access etc?

c. If so, which is the better tool to assist them obtain the employment - fiscal or monetary policy?
van Manen
Australia is now seeing a return to migration and we know this will assist in starting to fill job vacancies. What, if any, impact will this have on wage price growth?
van Manen
What in the RBA's view is the tipping point for wage growth to become a wage price spiral, given significant supply side-driven price inflation over the past 18 months?
van Manen
Whilst the RBA has explained that the term funding facility (TFF) was at a fixed rate, could you not offset a bank's liability to their exchange settlement accounts (ESA)? For example if Bank A has a TFF of $100bn and an ESA of $200bn then they would only get paid interest on the difference between the 2 balances, i.e. $100bn at the applicable rate.

a. If not, why not?

b. Wouldn’t the above solution ensure that banks are not getting a free ride at the expense of taxpayers?
van Manen
In Governor Lowe's statement accompanying the latest rate rise on 7 February 2023, he said the following: 'Inflation is expected to decline this year…medium-term inflation expectations remain well-anchored, and it is important this remains the case'.

If this is truly the case and given that as of December 2022 the medium term (5 year) rolling average for inflation was 2.7% within the 2-3% average outlined in the RBA Corporate Plan, why are interest rates continuing to increase?

Committee Secretariat contact:

Committee Secretary
Standing Committee on Economics
PO Box 6021
Parliament House
Canberra ACT 2600

Phone: (02) 6277 4587

About this inquiry

The Standing Committee on Economics has agreed to inquire into the 2023 and 2022 Annual Reports of the Reserve Bank of Australia.

Track Inquiry

Past Public Hearings

09 Feb 2024: Canberra
11 Aug 2023: Canberra
17 Feb 2023: Canberra


Inquiry Status



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