Leadership Matters: Ryan Stokes takes issue with Reserve Bank for slowing Australia’s economic growth
Leading Australian business executive Ryan Stokes has taken issue with the Reserve Bank of Australia, saying the central bank needs to stop chasing the tail of outdated economic data if it wants to implement effective monetary policy.
Speaking at a Leadership Matters breakfast hosted by The West Australian on Thursday, Mr Stokes said the RBA needed to show greater leadership as a steward of Australia’s economy.
“The constrictive and inflationary impact of higher rates and the lag effect of monetary policy suggests they (the RBA) can act in line with or ahead of the data, not after it,” he said.
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Mr Stokes, the boss of Seven Group Holdings, believes economic headwinds in Australia are being exacerbated by the RBA, but said the country is still the best place for the $17 billion company to deploy its capital.
“We remain confident in the Australian economy, despite the sluggish GDP growth, which is more a function of the current monetary policy,” he said.
The cash rate in Australia currently sits at 4.35 per cent. The RBA has not cut the rate since November 2020 amid the COVID-19 pandemic — when it was at a record low 0.1 per cent.
It is now out of step with other major central banks, such as the US Fed Reserve and European Central Bank, which have already started easing cycles.
Mr Stokes suggested the RBA’s laser-focus on inflation was a deviation from the organisation’s charter.
“The RBA, with the deliverance of its power, should ensure that monetary and banking policy is directed to the greatest advantage of the people of Australia, the economic prosperity and welfare of the people of Australia,” he said.
“That’s not my opinion. That’s a direct extract from a Reserve Bank Act of 1959.
“Interestingly, the Act did not mention inflation. In the pursuit of these objectives, the RBA has come to the view that having a medium, long-term target on inflation is essential.”
Rising interest rates have left millions across the country facing significant mortgage stress.
Seven Group Holdings is a major stakeholder in West Australian Newspapers Limited, the publisher of The Nightly, thewest.com.au and The West Australian.
