Michele Bullock, deputy governor of Australia’s Reserve Bank of Australia (RBA), will become its inaugural female head starting September 18th for seven-year term. Treasurer Jim Chalmers made the announcement Friday saying Michele is the right person for this role.
The RBA is an independent agency with dual functions as both central bank and banknote issuing authority for Australia. Since its formation in 1960, there has been an appointed governor.
Lowe’s departure had long been anticipated following his widespread criticism for encouraging homeowners to take out mortgages by telling them rates wouldn’t go up until 2024, only for him to raise them 12 times until reaching an all-time high of 4.1% and adding hundreds of dollars each month in repayment costs – placing strain on household finances. He was also widely criticized for lacking transparency when making and communicating about monetary policy decisions and communicating them.
Prime Minister Anthony Albanese applauded the appointment of Bullock as leader of the RBA, hailing her as an “outstanding economist and leader.” Chalmers explained his decision not to reappoint Lowe was made on an assessment that it wasn’t in the public’s best interests for him to remain. It was a difficult choice but Bullock seems equipped to handle challenges facing her central bank as well as implement recommendations from an external review that began in 2022.
Following an independent review into its operations that recommended major reforms to policy formulation and communication processes, speculation about changes at the top of the central bank had grown rapidly. Last month, however, its board voted to appoint Margaret Bullock as its next governor – an esteemed economist with a master’s degree from London School of Economics earned in 1985 who is leading it through one of its biggest reorganisations ever seen at RBA.
Analysts expect Bullock to continue on her predecessor’s gradual rate tightening path, though likely at a more gradual pace. Westpac chief economist Bill Evans does not see Bullock being any more hawkish than Lowe but believes she remains committed to reaching inflation targets on time.
Investors were unaffected by Bullock’s news. Financial markets anticipate the Reserve Bank of Australia will raise rates by 25 basis points at their August 9 meeting and then another 25 basis point hike at September’s meeting, according to JP Morgan chief economist Ben Jarman who no longer projects a final hike by November. Capital Economics economist Marcel Thieliant prefers a slower pace and is forecasting another move lower by 25 basis points to 4.25% for their next rate increase.
Former deputy treasurer Bullock has proven her ability to navigate the challenges associated with being RBA governor, including dealing with above-target inflation and overseeing an overhaul of central bank communications and decision-making processes, according to Thieliant.
