There are few institutions in this country more arrogant, unaccountable, and consistently wrong than the Reserve Bank of Australia.
For more than a decade, the RBA pumped cheap money into the system, fuelling one of the greatest debt binges in our history. Every misstep since has been cloaked in jargon or brushed aside, but the reality is hiding in plain sight. Their own record reveals a pattern of recklessness followed by panic, a cycle of boom and bust created not by accident but by choice.
In 1990, the official cash rate stood at a brutal 17.5%. Back then, borrowing meant something. Debt had a cost. That was the world our parents bought homes in. But by November 2020, the RBA had slashed the cash rate to an eye-watering 0.10%. Near free money, for nearly nothing.
What followed was entirely predictable to anyone not living in an academic bubble. Cheap debt flooded the system, property prices went berserk, investors piled in, and Australians scrambled to buy anything with four walls and a patch of dirt before they were priced out forever.
And just when the madness peaked, the RBA decided to slam on the brakes. From May 2022 the RBA began an aggressive tightening cycle, lifting the cash rate from 0.10% to 4.10% by June 2023. Mortgage holders were left shell-shocked. Rapid hikes pushed typical variable-rate repayments up by around half or more; heavily indebted borrowers saw near-doubling. Families who had borrowed responsibly under the RBA's own guidance suddenly found themselves underwater.
The Reserve Bank did not just misread the room. It lit the match, doused the place in fuel, then blamed the fire on the curtains.
These were not isolated slip-ups. They formed a consistent pattern of failure. Remember the infamous pledge of “no rate hikes until 2024”? That hollow promise encouraged households to borrow to the hilt, only for the RBA to backflip and start hiking furiously within a year. Even the former governor had to mumble an apology for the carnage it caused. Then there was the disastrous yield-curve control policy, where the Bank pegged three-year government bond yields to the floor before abruptly abandoning the experiment in 2021, leaving markets in chaos and its credibility in tatters. Add to that the 281 billion dollar quantitative easing binge, which loaded the balance sheet with risk and left the RBA posting record losses and running negative equity when rates finally rose.
And rather than own up to this litany of blunders, the RBA prefers to distract and deflect. They downplay the inflationary impact of government subsidies like first-homebuyer grants, even as everyone can see these schemes pour fuel on demand. They refuse to confront the reality that mass migration has turbocharged demand while building approvals collapsed, creating the perfect storm of shortages and skyrocketing prices.
This is what happens when technocrats are given unchecked power. No one at the RBA lost their job. No one forfeited their bonuses. The people paying for their failures are everyday Australians, young couples, retirees, small business owners, while those in ivory towers pretend none of it was their fault.
And the truth is even starker: the RBA does not treat migration as a problem at all. It calls it a long-term economic benefit, even as the surge clearly worsens housing demand today.
The cumulative impact of these blunders on the average Australian cannot be overstated. And just last week, the Bank confirmed what many already feared: the record low interest rates of the pandemic era are not coming back, with Australians told to get used to a cash rate anchored around 3.6 percent for the foreseeable future. Cheap money pushed housing out of reach for a generation of first-home buyers, while those who did manage to purchase are now facing crushing repayment hikes that strip thousands from their household budgets each year. Savers were punished during the low-rate years with meagre returns, only to be hit again with surging inflation as the cost of groceries, energy and rent spiralled. Small businesses that borrowed in good faith are now struggling to service their debts, and retirees who planned carefully around stable monetary policy have seen their assumptions upended. In short, the RBA's failures have translated into higher costs, lower living standards, and shattered confidence for millions of ordinary Australians.
The pattern is clear and the consequences are real. Australians deserve accountability from those who broke the system, not lectures from the very people who lit the fire.
Thought for the Day
“I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson
