Former RBA board member Ian Harper says a November interest rate hike is ‘plausible’ | The Business

Former Reserve Bank board member, Ian Harper, says it’s “plausible” the RBA will hike interest rates again on Melbourne Cup Day. And while the financial pain for mortgage borrowers is particularly acute, Mr Harper backed his old boss insisting hiking rates is the best tool the bank has to tame inflation. “It is clearly true that the impact of movements of the cash rate affect mortgage holders first because of our variable mortgage rate system here in this country,” Ian Harper said. “That also, I might add, makes monetary policy more effective. That’s the reason why, for instance, to get the inflation burst under control, which we did, we moved interest rates up as a board 13 times. We didn’t go as high as other countries went with the cash rate, and we didn’t go as high in inflation because our mortgage rates work very effectively.” Ian Harper stressed that while the government makes its views on the economy and inflation well known, and the RBA board members hear those messages, it does not influence the Reserve Bank’s decisions on interest rates. “But the notion that in some way the government directly influences, or the Treasurer, directly influences the decision making is just wrong. I was on the board for ten years under at least governments of both political persuasions, let’s say. Never happened. That doesn’t happen.

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