They weren't buying bonds to make money, they were doing so to...

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Hollyw00d

2,924 Posts.

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31/05/23

13:27

Post #: 68056456
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Originally posted by AuCu: ↑

It kooks like Phillip Lowe will be increasing rates until the month he leaves the RBA, he appears to be a natural born loser.

In 2023 an independent review of the RBA was conducted.The report concluded that Philip Lowe was responsible for trading losses of between $30bioAUD and $58bioAUD as a result of the RBA's bond purchase program and term funding facility. These losses left the Reserve Bank technically insolvent and as a result Lowe and the Federal Treasurer agreed to halt all dividends to Australian tax payers until the Reserve Bank returned to positive equity, estimated to take until at least 2032.
The report also found that the processes for the initial assessment and ongoing monitoring of the interest rate risks associated with the bond purchase program and term funding facility "were incomplete" and "did not pay sufficient attention to the risks posed to the RBA's earnings" and did not contain the necessary scenario analysis for increases in interest rates.
Despite losing up to $58bio, which is to be covered by taxpayers, Philip Lowe is still employed as the Governor of the Reserve Bank and is seeking another seven year term in September 2023. Philip Lowe's loss is ten times bigger than the next biggest loss in Australian corporate history which was HIH at an estimated $5.3bioAUD.

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They weren't buying bonds to make money, they were doing so to increase liquidity to prevent a crash. Right or wrong he would have been equally criticised if he didn't act and the market did in fact crash.

Now the tables have turned and its time to raise rates as inflation is our worst nightmare. People have to take responsibility for their own financial affairs and stop blaming others for the position they are in.

Inflation is worse than higher rates - people cant seem to grasp this, excess spending needs to stop!

Todays rates are basically negative 2.95% (3.85% less 6.8% inflation) which is more stimulative compared to when the cash rate was @ zero.

Last edited by Hollyw00d: 31/05/23
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