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Senators to grill new deputy RBA governor

The Reserve Bank’s decision to keep the cash rate on hold will come under scrutiny at a parliamentary hearing.

Michele Bullock will make her first appearance as deputy governor of the Reserve Bank of Australia when she faces a Senate hearing following last week’s federal budget.

The former assistant governor for the payment system has just taken over from Guy Debelle, who resigned from the central bank last month to take up a role in the private sector.

Ms Bullock appearance at Senate estimates on Wednesday evening follows Tuesday’s monthly RBA board meeting where it left the official cash rate at a record low 0.1 per cent for another month.

However, RBA governor Philip Lowe notably removed the word “patient’ from his post-meeting statement, which has featured in his previous instalments.

He also warned that the rate of inflation – already at 3.5 per cent – is expected to grow further in coming quarters, and that the board will be monitoring the data closely from now on.

Commonwealth Securities senior economist Ryan Felsman said the RBA appears to be losing its patience.

“With price pressures becoming more widespread, government pandemic restrictions removed and the economy growing at a strong pace, pressure is building on the RBA to lift the cash rate from record low levels enacted during the pandemic crisis,” Mr Felsman said.

CBA Group economists expect the pre-conditions for an interest rate hike to be broadly met by the June board meeting, and are tipping a 0.15 per cent increase.

Mr Felsman said this would end the longest RBA policy easing cycle on record.

The RBA last raised the cash rate in November 2010.

The Senate committee will also quiz officials from the Department of Treasury and the Australian Taxation Office.

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