Australia’s government will not reappoint Philip Lowe as Reserve Bank governor, as widely anticipated, seeking a circuit-breaker as criticism of the central bank’s performance mounts.
(Bloomberg) — Australia’s government will not reappoint Philip Lowe as Reserve Bank governor, as widely anticipated, seeking a circuit-breaker as criticism of the central bank’s performance mounts.
Lowe, whose seven-year term expires on September 17, isn’t going to receive an extension, according to a person familiar with the matter. Lowe declined to comment when contacted by Bloomberg early Friday.
Treasurer Jim Chalmers is expected to announce his replacement on Friday following a meeting of the Cabinet, according to Australian Broadcasting Corp., which first reported the news.
The three main contenders are understood to be Deputy Governor Michele Bullock, Treasury Secretary Steven Kennedy and Finance Department Secretary Jenny Wilkinson, according to the ABC.
The decision has looked an increasing formality as Chalmers held off on an announcement until July, seeking to limit the time where there would be both an incumbent governor and a successor in the wings.
It comes after an independent review of the RBA recommended major changes at the institution, including setting up a separate policy committee, fewer rate meetings and press conferences after each decision. That followed criticism of Lowe’s forward guidance during Covid and confusion over communications.
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Lowe, 61, was accused of letting inflation undershoot the RBA’s 2-3% target before Covid, then of leaving interest rates too low for too long during the pandemic, having guided that they were unlikely to rise before 2024.
Instead, inflation surged and the RBA began hiking in May 2022, increasing rates by 4 percentage points in a little over a year. Compounding that have been poor communications that left investors and traders confused over the bank’s reaction function and policy intentions.
The backlash intensified earlier this year following a media report that Lowe attended a closed-door briefing with rate traders on Feb. 9 — despite not having made a public appearance to explain a hawkish shift at a policy meeting two days earlier.
Lawmakers from the Greens Party had publicly called for Lowe to be dismissed and some parliamentarians from the ruling Labor Party had questioned whether his term should be extended.
(Updates with confirmation governor won’t be extended.)
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