Finance Minister Katy Gallagher blasts ‘out of control’ Greens after demand for RBA intervention

A planned overhaul of the Reserve Bank is effectively dead and buried after Labor rejected a “crazy” Greens ultimatum to overrule the institution and cut interest rates.

Finance Minister Katy Gallagher blasted the Greens as “out of control” after the left-wing party declared it wouldn’t support the reforms without an immediate rate cut to ease pressure on mortgage holders.

The Greens said if the RBA holds the cash rate at 4.35 per cent at Tuesday’s meeting — as is widely expected — then Treasurer Jim Chalmers must exercise his never-before-used power to steamroll the bank’s independence.

“If Jim Chalmers wants this Bill passed, as he said he does, and if the governor of the Reserve Bank, Michele Bullock, wants to see this Bill passed, as she has said she does, they know what they’ve got to do,” Greens economic justice spokesman Nick McKim said.

Senator Gallagher said the Federal Government would not support the “crazy economic ultimatum” that was “economically irresponsible”.

“Well, I just think the Greens are out of control at the moment,” she said.

“Full of self-importance and out seeking a populist approach to everything. And it’s crazy what they’re saying to us.”

It leaves Labor without a path to pass its RBA reforms after the Opposition objected to the main change — a proposal to establish two separate boards overseeing monetary policy and governance.

The Coalition claimed Labor would use the restructure to “stack” the rates board with political allies.

Senator Gallagher refused to accept the planned overhaul was dead, insisting it remained on the table if the Coalition and the Greens were willing to shift position.

“We’re pretty keen on them, so is the Bank,” she said.

She reiterated that position at a press conference on Monday afternoon, during which she again labelled the Greens as “crazy” and argued the Coalition was only resisting the changes for political reasons.

The Reserve Bank is expected to keep rates on hold for a seventh consecutive month on Tuesday, prolonging the pain for homeowners who endured 13 hikes in the 18 months to November 2023.

Only one of the four big banks, CBA, is predicting a rate cut before Christmas.

Dr Chalmers and Prime Minister Anthony Albanese were last week hosing down the prospect of imminent relief for homeowners after the US Federal Reserve slashed interest rates for the first time in four years.

Asked on Monday what message he had for homeowners begging for a rate cut, Mr Albanese said the independent RBA made its own decisions.

“What we have done, though, is to halve inflation,” he said.

The calls for an earlier-than-expected rate cut in Australia will grow louder if figures due out on Wednesday show monthly inflation continues to fall.

Cutting rates by 25 basis points – taking it to 4.10 per cent – would save homeowners with a mortgage of $641,000 about $1200 per year, according to the Greens.

“The Greens are using our power in Parliament to fight for renters and mortgage holders,” Senator McKim said.

“The Treasurer has the power to step in, he’s just not using it. The Reserve Bank could act, but they are not acting.”

“Mortgage holders are getting smashed right now.”