The head of the Federal Treasury says it would be difficult to implement laws which regulate interest rates whilst having an independent central bank that was responsible for monetary policy.
Earlier in the week Joe Hockey, shadow treasury spokesperson suggested that the treasurer should legislate to ensure that lenders do not raise their interest rates higher than any hike enacted by the Australian central bank.
Ken Henry, the Treasury secretary told a senate hearing that the practice of regulated interest ended in 1986, and that since then, the Reserve Bank of Australia sets monetary policy.
Treasury secretary Ken Henry told a Senate estimates hearing that regulated interest rates ended in 1986, and monetary policy since has been set by the RBA.
“It would be rather difficult to have a central bank independently operating monetary policy through interest rates at the same time another body – the government – regulating those interest rates, It doesn’t sit too well together.” Dr Henry said.
Dr. Henry rec