Hot seat no problem for seasoned RBA governor Philip Lowe

When Dr Lowe strode into parliament committee room 2R1 just before 11.15am yesterday to face 90 minutes of scrutiny from a dozen senators, he only had his deputy, Michelle Bullock, for company.

Not only that, but he declined the opportunity to make an opening statement, which is often seen as a way to help frame a hearing or, at the least, to get some key messages out.

So it was virtually without preamble that the grilling started in a politically charged atmosphere.

Labor senators wanted to get the governor to endorse the government's fiscal strategy and its action to constrain energy prices; Coalition senators were keen lure him into saying the government was making the inflation problem worse; and Greens senator Nick McKim just wanted him to say why he shouldn't quit.

In his own undemonstrative way, he left them all disappointed.

On the government's budget settings and expenditure, Dr Lowe characterised its fiscal policy as "broadly neutral".

The central banker said the best way to think about it was whether the collective budget deficits of the federal and state governments were changing as a share of gross domestic product. His conclusion was they were not.

Pressed by Coalition senator Jane Hume on whether the Albanese government should be doing more, Dr Lowe said that "the Treasurer doesn't comment on what I should or shouldn't do and so I'm not going to comment on the direction of fiscal policy".

He then went on to say the fact that the government at the October budget saved most of its revenue windfall had been helpful while the price caps in its energy package would reduce inflation next year by a "meaningful" 0.5 per cent.

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But he didn't let the government completely off the hook, emphasising the importance of budget repair.

"We've talked before ... about the importance of having a strong budget position in the medium term, because at some point...we'll have another downturn and we want the government to be able to respond," he said.

If the government wants to meet demands for increased investment in health, ageing, defence, disability and education, the governor said, "they need to find a way of paying for it, and that way is not debt".

It fell to Senator McKim to convey the anger many feel, particularly those who acted on the governor's 2021 remarks that rates were unlikely to rise before 2024.

"You induced people into taking on record levels of debt by saying that interest rates were unlikely to increase until 2024," the Greens senator said. "Can you explain to the renters and mortgage holders of Australia why you still deserve to hold your job?"

If the line of questioning was meant to rattle Dr Lowe, it didn't work.

An experienced performer in such settings, it was clear the governor had been expecting it and his response was firm and unequivocal.

"I have a seven-year term as the governor of the bank and I intend to serve out that term. It's an important job," he said.

He also took the opportunity to point out that responsibility for interest rate decisions was not his alone but was shared by all nine members of the Reserve Bank board.