In response to popular outrage over sharply rising interest rates, Australia selected a female, in a first, to lead its central bank, replacing the present governor with his deputy.
Sidelining a second term for Governor Philip Lowe, Australian Treasurer Jim Chalmers and Prime Minister Anthony Albanese announced on Friday that Michele Bullock would lead the Reserve Bank of Australia (RBA) for the coming seven years.
On September 17, Lowe will quit the bank, ending a 43-year-tenure there. The choice was made as Lowe was scheduled to travel to India with Chalmers the following week for a Group of 20 conference.
Chalmers stated in a news conference that a governor typically serves a single term, and he believed Bullock was best suited to guide the RBA through an upcoming restructuring.
Chalmers told reporters, “This is a history-making appointment. Michele Bullock will become the first woman to ever lead the Reserve Bank in this country.”
Since Lowe encouraged borrowing during the COVID-19 pandemic in 2021 by claiming rates wouldn’t likely rise until 2024, the government has been under pressure to fire him. However, in mid-2022, two years ahead of schedule, rates began to climb.
Since then, the central bank has increased rates 12 times, pushing them to a decade-high of 4.1% and pushing up monthly mortgage payments by hundreds of dollars at a time when the cost of living issue is already straining household finances.
Lowe even went so far as to apologise to any borrowers who had relied on his guarantees in the policy.
Australian bonds did not reacted to Bullock’s appointment, although followed later on the reaction of their international counterparts. The local currency remained unchanged at $0.6889.
Lowe recently stated that it was feasible that additional rate increases would be necessary to rein down inflation. The markets are split on the anticipated outcomes of the upcoming two policy sessions, which he is scheduled to preside over in August and September.
Lowe, 61, has also stated that if asked to remain, he would do so honourably but that he would respect the government’s decision to choose a new leader. His two predecessors, who were both career central bankers, got reappointed for additional terms, for a combined 10 years.
In a statement on Friday, Lowe said, “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.”
60-year-old Michele Bullock entered the RBA in 1985, at that time she had finished her masters from the London School of Economics and remains a respected banker by analysts. One of the market analysts, Tony Sycamore, at IG Group said, “She’s a sensible choice. She’s got really good credentials. And if you look at how the market has reacted post the announcement, the Aussie dollar has barely moved. That suggests to me that the market is very comfortable with her appointment.”