FILE PHOTO: Deputy Governor of the Reserve Bank of Australia (RBA) Michele Bullock speaks during Senate Estimates at Parliament House in Canberra, Australia, February 15, 2023. AAP Image/Lukas Coch via REUTERS/File Photo
SYDNEY -Michele Bullock was appointed head of Australia’s central bank on Friday, becoming its first female governor as it undertakes a sweeping reorganization and after a public backlash over steeply rising interest rates.
Australian Treasurer Jim Chalmers and Prime Minister Anthony Albanese said Reserve Bank of Australia (RBA) Governor Philip Lowe would not be reappointed and would leave the bank after finishing his current seven-year term on Sept. 17, marking the end of his 43-year career. Bullock is currently deputy governor.
In a press conference, Chalmers said it was not out of the norm for a governor to only serve one term and he felt Bullock was best placed to lead the RBA through a coming reorganization.
READ: Australia nears wide-ranging shake up of its central bank
“This is a history-making appointment,” Chalmers told reporters. “Michele Bullock will become the first woman to ever lead the Reserve Bank in this country.”
The government has been under pressure to dump Lowe for encouraging people to borrow in 2021 by saying interest rates were unlikely to rise until 2024, only to start hiking two years early in mid-2022.
READ: Australia’s top central banker apologizes for past rate guidance
The central bank has since lifted rates 12 times to a decade-high of 4.1 percent, adding hundreds of dollars to monthly mortgage repayments at a time when a cost of living crisis is already stretching household budgets.
Just this week, Lowe said it was possible rates would have to rise yet further to bring inflation to heel. He is due to chair the next two policy meetings in August and September.
Lowe had also said he would be honored to stay at the bank if asked, but would understand if the government wanted a new leader.
His two predecessors, again both career central bankers, were reappointed to second terms and each served 10 years in total.
“The Reserve Bank is in very good hands as it deals with the current inflation challenge and implementing the recommendations of the Review of the RBA,” Lowe said in a statement on Friday.
Bullock is widely respected by economists and financial markets showed little reaction to the change.
“I am deeply honored to have been appointed to this important position,” Bullock said. “It is a challenging time to be coming into this role, but I will be supported by a strong executive team and boards.”
The RBA is undertaking the biggest reorganization in three decades after an independent review into its operations recommended sweeping changes to the way policy was formulated and communicated.
READ: Australian central bank governor warns against failing to contain inflation
Speculation about a change at the top has been brewing for months as rates kept rising, leading Lowe to take the extraordinary step of apologizing to any borrowers who had acted on his policy assurances.
The decision comes as Lowe is due to accompany Chalmers to a Group of 20 meeting in India next week.