Australia: Michele Bullock to be the new head of the central bank

Michele Bullock has been chosen as the new head of Australia’s central bank, replacing current Governor Philip Lowe.

Bullock will begin her role in September as the first female governor in the 63-year history of the Reserve Bank of Australia (RBA).

The decision comes after several interest rate hikes in Australia, as in most major economies, over the past year.

Treasurer Jim Chalmers and Prime Minister Anthony Albanese announced that Lowe would not be reappointed, marking the end of his 43-year career in various roles at the bank after completing his current seven-year term on 17 September.

‘Challenging time’ to break into role, admits Bullock

Currently serving as Lieutenant Governor, Bullock is highly regarded by economists.

Chalmers said the first woman to take the helm of the RBA was a “historic appointment”.

“I am deeply honored to have been appointed to this important position,” said Bullock. “It is a challenging time to take on this role, but I will be supported by a strong executive team and board.”

The RBA is undergoing its most substantial reorganization in three decades, prompted by an independent review of its operations, which requires significant changes in policy formulation and communication strategies.

Unpopular rising rates in some industries

Lowe’s tenure at the bank has been marred by government and media criticism of rate hikes aimed at curbing inflation, which have saddled homeowners with rising mortgage costs.

The government faced mounting pressure to remove Lowe from office after his 2021 statements encouraging borrowing, stating that interest rates were unlikely to rise until 2024, only for increases to begin in mid-2022.

One of the main reasons for this was the rapid acceleration of inflation triggered by Russia’s invasion of Ukraine in February 2022, exacerbating inflationary pressure following the COVID pandemic.

Since then, rates have risen 12 times, reaching 4.1%, the highest level in a decade.

That said, during the COVID pandemic, Lowe was forced to cut rates to 0% – levels never before seen in RBA history – in an attempt to encourage as much economic activity as possible amidst severe restrictions on trade and travel. Interest rates are still lower in Australia than they have been for most of this century.

Lowe recently mentioned the possibility of further interest rate hikes to try to control inflation.

Speculation around a leadership change had been brewing for months, even as Lowe took the unusual step of apologizing to borrowers who acted on his earlier advice.

ss/msh (AFP, Reuters)