Michele Bullock has been named as the new governor of the Reserve Bank of Australia, replacing Philip Lowe. She is the first woman to lead the central bank.
Prime minister Anthony Albanese said Bullock, who has been the RBA deputy governor since April 2022, was an “outstanding economist and leader with a deep understanding of the RBA’s role and operations, built up over her long and distinguished career with the central bank.
“Her appointment strikes the optimal balance between providing exceptional experience and expertise and offering a fresh leadership perspective,” Albanese said at a press conference on Friday morning.
Albanese, appearing alongside treasurer Jim Chalmers, said that after four decades of service, including most recently as deputy governor, Bullock will become “the first female governor since the independent RBA was founded in 1959”.
Albanese thanked Lowe, who he said had helped the Australian economy navigate “unprecedented challenges” during the Covid-19 pandemic and economic downturn.
Lowe’s seven-year term as chief of the RBA expires on 17 September and he was widely expected to be replaced.
Guardian Australia confirmed on Friday that Lowe’s term would not be extended and that the announcement of his successor was imminent. Bullock’s appointment will take effect from 18 September.
Despite the success of Reserve Bank interventions at blunting and rebounding from the Covid-19 downturn, Lowe has been widely criticised for guidance that interest rate rises were unlikely until 2024 and the slow start to monetary policy tightening in early 2022.
Chalmers told reporters in Canberra the decision not to reappoint Lowe was “the right call” but “not an easy call”.
“He goes with our gratitude and he goes with dignity.”
Chalmers said that of eight RBA governors only five had been reappointed so “extending a governor’s term has been in historical terms the exception rather than the rule”.
Chalmers said the decision was “not about any one decision taken by the Reserve Bank board or any one outcome”. “This is genuinely about who is best placed to take the Reserve Bank forward in the future.”
Chalmers said he knew from conversations with Bullock that she was “committed” to implementing recommendations of the review of the Reserve Bank.
This will see a new statement of the conduct of monetary policy this year and legislation to reform the bank, including setting up a separate board within the RBA for setting the cash rate.
Lowe said Chalmers had made a “first-rate appointment” and congratulated Bullock.
“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,” he said in a statement. “I wish Michele all the best.”
In June Bullock drew flak for comments that if “unemployment remains too low for too long, inflation expectations will rise, which will make it that much harder for the monetary authorities to bring inflation back down”.
However, Bullock did qualify that this did not mean “other part of our mandate – maintaining full employment – has become any less important”.
In recent days the Coalition has pressured the government not to punish Lowe for tough but necessary interest rate rises, while Peter Dutton publicly warned his replacement should not be a senior public servant.
On Friday Albanese said that statement had “less than zero” impact on the government’s decision, and accused Dutton of a “completely reprehensible” politicisation of the public service.
He noted that both candidates targeted by that remark – treasury secretary Steven Kennedy and finance department secretary Jenny Wilkinson – had received senior appointments under the Coalition.
Chalmers said that Bullock will be “completely independent” of the government, citing the fact she is “tremendously accomplished” and because the government “cherishes the Reserve Bank’s independence”.
The chief executive of the Grattan Institute, economist Danielle Wood, said it was “challenging” for Lowe to be reappointed due to the perception he “wasn’t necessarily enthusiastic” about the breadth of changes recommended by the review.
“It would be very unfortunate if it [were] in any way a reflection of the very difficult decisions the bank has had to make over the past year and we certainly don’t want to be in a world where Reserve Bank governors are not getting reappointed because they’ve had to make hard decisions,” Wood told ABC TV.
In the lead-up to Friday’s cabinet decision Lowe has softened his stance on further interest rate rises, suggesting that it is “possible that some further tightening will be required” in contrast to earlier comments that further rises are likely necessary.
