SYDNEY (Reuters) – Long-delayed reforms to the Reserve Bank of Australia (RBA) suffered another setback on Monday as Greens MPs demanded the Labor government cut interest rates in return for their support for the legislation.
In a statement, the Greens said they would not implement Labor’s RBA reforms until interest rates were cut.
“The Reserve Bank should cut rates tomorrow and if they don’t, the Chancellor of the Exchequer should use his existing powers to cut rates and ease the pressure on mortgage holders,” the Greens said.
The RBA will decide on its next policy action on Tuesday, having left interest rates unchanged at 4.35% since November. Policymakers have all but ruled out a rate cut this year as inflation has remained stubborn, angering borrowers.
The reforms, recommended by an independent review last year, include the creation of a separate governing council to complement the current monetary policy council.
The rate-setting board is made up of nine members, and will still have six external members. The Liberal-National opposition says the ruling Labor Party could use it to include appointees who are favourable to the current government.
Just two weeks ago, the Liberal-National coalition opposed the reforms, meaning Finance Minister Jim Chalmers needed the support of the Greens or independent legislators to push through the changes.
Finance Minister Katy Gallagher said the Greens had “lost control”.
“We’re not going to do that because it’s insane. It’s economically irresponsible and we’re not going to do it,” Gallagher said in an interview with ABC Radio.
The political tug-of-war keeps the reform legislation in limbo, leaving the status quo in policy-making administration unchanged.
The RBA has already adopted a number of recommendations from the inquiry, including holding fewer but longer policy meetings and holding a press conference after each decision.
However, no decisions have yet been made on other matters, such as whether all board members should be present regularly to discuss their views on the policy.
(Reporting by Stella Qiu; Editing by Sam Holmes)
