Reserve Bank chief Philip Lowe will discover his fate in just weeks after a brutal poll revealed more than half the country wants him ousted from the top job.
Dr Lowe has faced heavy scrutiny for raising interest rates 12 times in the past 13 months, creating severe financial pressure on mortgage holders.
In 2021 the beleaguered Reserve Bank governor suggested interest rates would remain at an all-time low of 0.1 percent until 2024 only to rise at the most aggressive pace since 1989.
Dr Lowe’s seven-year term ends on September 17 and, if his term is not extended, he will be the shortest-serving RBA boss in nearly three decades.
Treasurer Jim Chalmers has revealed he will announce within the next month whether Dr Lowe will remain in her post or whether a new governor will be appointed – amid speculation a woman will soon take the top job.
Reserve Bank governor Philip Lowe (pictured) will learn his fate in just a few weeks as a poll last week showed more than half the country wanted him removed from the top job.
‘My intention is to come to a conclusion on the RBA governor and make an announcement in July, but certainly before returning to Parliament – that has always been our intention,’ Dr Chalmers said on Thursday.
‘The RBA governor’s current term ends in September. We have said for some time that we would consider that appointment in the middle of the year, which is now the middle of the year.’
Dr Chalmers said it was a ‘big call’ to make and he was ‘in the process of consulting with my cabinet colleagues and others’.
‘And so, we will work through it in the usual methodical and considered way,’ he said.
‘My intention is to come to a scene in the coming weeks, ideally to announce the results in July, but certainly before returning to Parliament.’
The treasurer reiterated his stance on ‘finalizing a view’ on Dr Lowe’s tenure next month when he was interviewed on the ABC’s Radio National.
He told host Patricia Karvelas that he held Dr Lowe in ‘very high regard’ because he had a difficult job and insisted there was no suspected conflict between the government and the central bank over rate hikes.
“What I was saying is that I cherish the independence of the Reserve Bank,” he said.
‘I have made this clear more than once. I think this is an important feature of our system.’
‘And part of that means I explain and defend the decisions that are made on fiscal policy and the governor and the board explain and defend the decisions that are made on fiscal policy and that’s appropriate.’
With interest rates at an 11-year high of 4.1 percent, monthly variable mortgage payments are already 58 percent higher than a year ago.
Federal Treasurer Jim Chalmers (pictured) will announce whether Dr Low will retain his position as head of the central bank or appoint a new governor next month.
With interest rates at an 11-year high of 4.1 percent, monthly variable mortgage payments are already 58 percent higher than a year ago (stock image).
A poll of nine newspapers published last week found that 52 percent of respondents thought Dr. Lowe should lose his $1 million-a-year job as governor.
Only 17 percent of the 1,600 respondents to the survey said Mr. Lowe’s term should be extended.
If Dr Lowe’s term is not extended, he will be the shortest-serving governor since Bernie Fraser’s term ended in 1996.
Mr Fraser was the governor who presided over an 18 per cent interest rate hike in November 1989 and was the last governor whose rate hike led to a recession.
The recession ended in 1991 due to aggressive rate hikes. It was another 29 years before the 2020 recession covered the summer bushfires and Covid lockdowns.
Westpac, NAB and ANZ expect two more rate hikes that will take the cash rate to a 12-year high of 4.6 per cent, up from an 11-year high of 4.1 per cent now.
AMP Chief Economist Shane Oliver said the risk of rate hikes tipping Australia into recession in 2023 or 2024.
RBA Deputy Governor Michelle Bullock and Treasury Secretary Jenny Wilkinson have been considered as possible replacements for Dr Lowe.
April’s inflation rate of 6.8 percent was above the RBA’s 2 to 3 percent target and the Reserve Bank expects it to remain at elevated levels until mid-2025.
Dr Chalmers commissioned a review into the RBA last year and published his recommendations in April, which included the creation of an expert monetary policy board made up of economists to set interest rates.
Labor, with support from the opposition, will introduce legislation amending the Reserve Bank Act of 1959 so that the government cannot overturn its interest rate decisions.
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