The apology by Reserve Bank governor Dr Philip Lowe for inadvertently misleading hundreds of thousands of Australian borrowers into believing interest rates would not begin to rise until at least midway through 2024 has been a long time coming.
Subscribe now for unlimited access.
or signup to continue reading
While he has conceded, on numerous previous occasions, that the bank's messaging had been flawed and that he regretted that people had taken him at what most thought was his word, this is the first time Dr Lowe has actually used the "s" word.
"I'm sorry that people listened to what we've said and acted on that, and now find themselves in a position they don't want to be in," Australia's most senior financial public servant told the Senate Economics Committee in Canberra on Monday.
Public reaction to this mea culpa has, so far, been mixed. While some people have welcomed the admission of error, many others have turned to social media to vent their anger. Some of those are saying Dr Lowe had failed to do his job properly and should go.
"I'm sorry that I'm incapable of doing my job and that you thought I was capable of doing it, and now there are no consequences for me, but lots of consequences for you, because you listened to me. But I am sorry if that helps," one critic sarcastically tweeted.
While the Prime Minister was quick to reaffirm his support for the RBA governor in the wake of the apology, many are asking if, in light of the serious reputational damage the bank has suffered, Dr Lowe is the right person to lead the organisation moving forward.
He himself has acknowledged the RBA's credibility with the general public has taken a very severe hit following the repeated assurances, being made as late as October last year, that rates would stay low until 2024.
That said, when he was asked on Monday if he believed the RBA had lost the confidence of the public Dr Lowe said he did not think that was the case.
He is entitled to his opinion but it is quite apparent that many others are begging to differ.
While the RBA governor has defended the bank's messaging on interest rates, noting that it was always conditional on the state of the economy, he did flag changes in the way the bank communicates with the community it serves.
While this apparent commitment to greater clarity and transparency moving forward is to be welcomed, the question is whether or not, in view of this fiasco which resulted in almost 300,000 Australians taking out loans six or more times their annual incomes, Dr Lowe is the best pick to be the face of the RBA.
While the responsibility for the messaging rests with the entire board, Dr Lowe was the person who delivered it and therefore, in the eyes of his critics, is now very hard to take seriously as an oracle on economic matters on whom people can rely.
It is very important that, although as the RBA governor has repeatedly pointed out, the bank was dealing with a fast moving and challenging situation during which the economy came close to the brink of collapse, people need to have confidence that those running the show are on the top of their games when disaster strikes.
Given that, by its own account, the RBA got the Australia government bond yield target badly wrong and then stuck with a flawed policy for far too long despite a succession of red flags, this does not appear to have been the case.
It is to be hoped that the current review into the board examines how it is led, its composition, and who is to be held accountable when mistakes are made.
Dr Lowe could also ask himself if the best way to restore the bank's credibility within the community would be for him to step down.
