One of Michele Bullock’s early tasks as new Australian central bank chief will be to drive an overhaul of the institution — including fewer interest-rate meetings and regular press conferences — while also tackling uncomfortably high inflation.
(Bloomberg) — One of Michele Bullock’s early tasks as new Australian central bank chief will be to drive an overhaul of the institution — including fewer interest-rate meetings and regular press conferences — while also tackling uncomfortably high inflation.
Bullock said Friday after she was announced as the ninth Reserve Bank governor that a big part of her role will be “leading the bank through the change.” Treasurer Jim Chalmers described her as a “history-making appointment” and the “best person to take the bank into the future.”
Bullock, who hails from country New South Wales, will become the RBA’s first female governor, having worked in various positions in the central bank over the past 38 years. She took on the role of deputy governor in April last year and has been part of the nine-member rate-setting board through the current tightening cycle, which began a month after her promotion.
While the policy implications of her appointment are unclear, some economists described her as slightly more dovish than incumbent Philip Lowe. Still, the announcement didn’t prompt economists to adjust their forecast terminal rate, which sits at 4.6%, from 4.1% now, and market reaction was muted.
“The RBA do not provide a public record of voting for policy decisions. It’s unknown if the board is unanimous or split, given no individual votes,” said George Tharenou, chief economist for Australia at UBS Group AG. “More broadly, the relative position of Bullock is difficult to discern.”
At the margin, Bullock is “on the dovish side,” Tharenou said, referring a recent speech in which she strongly stressed that full employment has always been one of the RBA’s two main objectives.
His view was echoed by Diana Mousina, deputy chief economist at AMP Capital Markets.
“From some of her speeches over the past year I have taken out that she is probably a little bit more concerned than Philip Lowe was around the lags involved with monetary policy,” Mousina said.
“I also get the sense that she is a little bit more attuned to the risks to the household sector, specially in Australia where households are much more sensitive to interest rate changes compared to a lot of other countries.”
Inflation Tweak
Under Bullock, there will be a slight tweak to the RBA’s inflation mandate.
The government is set to sign a new statement on the conduct of monetary policy by year’s end that will specify the RBA’s 2-3% inflation target should be aimed at the mid-point and achieved “within a reasonable timeframe.” That compares with the current aim of staying inside it “on average over time.”
The change is part of a suite of recommendations from an independent review of the RBA that is likely to be legislated next year. Lowe has already announced the rate-setting board will shift to eight meetings a year from 11, beginning 2024, and that there will be a press conference after every one.
RBA watchers maintain that Bullock has the heft and gravitas to drive the implementation of the review, including creating a separate monetary-policy board with seven external members.
She is “well known and respected across the financial services industry,” said Matt Comyn, chief executive officer of Commonwealth Bank of Australia, the nation’s largest lender. “She is considered, has extensive experience and is well-suited to lead the RBA at this time.”
Bullock, who grew up in Armidale, describes herself as a “proud country girl” and said she found her initial plan to move to Sydney to pursue medicine so daunting that she instead chose to stay at home to study economics and graduate with honors.
She later went on to complete her master’s degree at the London School of Economics. The Australian Financial Review cited Bullock’s professor Charles Goodhart, a former Bank of England board member, as saying she is “extremely clever and bright.”
An RBA veteran, Bullock held assistant governor roles overseeing the financial system including housing market risks, as well as business services and the currency. She is highly-regarded as a leader for her plain-spoken manner and down-to-earth demeanor.
“She does have a lot of expertise as an economist, but one of the things I really value in this appointment is the style and nature of her leadership,” Chalmers told reporters Friday. “She is an accomplished leader, a highly respected leader, and that’s what we need at the bank to take it forward.”
Bullock has also openly spoken about a sense of responsibility to attract more women into economics and support diversity by also including people with culturally diverse backgrounds.
Times are already changing. Asked by Bloomberg in an interview in late 2012 how long it would be until Australia had a woman running the RBA, Bullock replied deadpan at the time: “probably a while.”
–With assistance from Nabila Ahmed.
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