Australia to decide fate of central bank chief in July

Governor of the Reserve Bank of Australia (RBA) Philip Lowe at the G20 Finance Ministers and Central Bank Governors Meeting in Nusa Dua, Bali, Indonesia, 16 July 2022. Made Nagi/Pool via REUTERS/File photo

SYDNEY  – The head of Australia’s central bank will find out in July whether he will be reappointed to a second term, as customary, or a new leader will be picked to manage the biggest shake-up of the institution in decades.

Treasurer Jim Chalmers told reporters on Thursday he would announce his decision on Reserve Bank of Australia (RBA) Governor Philip Lowe’s future in coming weeks, but would not be drawn on whether Lowe would keep his job.

Lowe, a four-decade veteran at the bank, has been under a cloud since repeatedly saying in 2021 that interest rates would not rise until 2024, only to reverse course and hike in mid-2022 when inflation unexpectedly surged.

Australia nears wide-ranging shake up of its central bank

The RBA has since lifted rates by an eye-watering 400 basis points to an 11-year high of 4.1 percent, causing financial pain for mortgage holders who feel they were enticed into borrowing by Lowe’s sanguine outlook.

In a testy appearance before lawmakers last November, Lowe took the unusual step of apologizing for any harm done. “I’m certainly sorry if people listened to what we’d said and then acted on that,” Lowe conceded at the time.

Australia’s top central banker apologizes for past rate guidance

The clamor of criticism, particularly in the media, led Chalmers to launch an independent review of the central bank which recommended sweeping changes in its operation and the way policy was formed.

It has also led for calls for Lowe to be ousted when his current term ends in September, and perhaps be replaced by someone from outside the bank.

Australia central bank to get new rate-setting board under review recommendations

The previous two governors, both insiders, were reappointed to another seven-year term and chose to step down after serving three years.

Lowe has stated publicly that he would accept reappointment if offered, but Chalmers has been non-committal.

Speaking on Thursday, Chalmers said he held Lowe in high regard but stopped short of endorsing him.

“Obviously, the Reserve Bank Governor needs to be well placed to implement the recommendations of the review and to take the Reserve Bank into the future,” said Chalmers.

“It’s a key institution and obviously makes decisions which matter a great deal to the living standards of the Australian people.”

Possible replacements being touted are the current deputy governor Michele Bullock, Treasury official Jenny Wilkinson and former Bank of Canada official Carolyn Wilkins, who also led the review into the RBA.