The findings of a wide-ranging review will factor into whether RBA governor Philip Lowe gets a second term, treasurer says
Reserve Bank Governor Philip Lowe’s job could be on the line amid a wide-ranging review of the central bank, Treasurer Jim Chalmers suggested.
Lowe’s term is due to expire next year. On Thursday, Chalmers said the decision on whether Lowe would get a second term would be made in September, as usual, according to a report by The Australian. But Chalmers said the findings of the review would factor into the decision.
“After that [review] it would be strange, I think, not to factor some of those conclusions in whatever we decide about the role of the governor,” Chalmers said on ABC Radio’s National Breakfast. “I obviously have a really good working relationship with Governor Lowe and I respect his independence.”
Lowe’s seven-year term as RBA governor expires in September next year. Before his term ends, a review of how the RBA sets monetary policy will be given to the treasurer in March, The Australian reported.
The review, announced in July, aims to ensure that Australia has the “world’s best and most effective central bank,” Chalmers said.
He has also repeatedly said the review was not a “performance review” of Lowe, who has been on the receiving end of harsh criticism for his repeated comments last year that the central bank was unlikely to hike interest rates before 2024. Since May, the bank has hiked rates eight times.
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“[The review] will obviously guide the kind of Reserve Bank we want, and the personnel, the leadership of the bank will clearly feed into those kinds of considerations,” Chalmers said. “There’s been a lot of interest in the composition of the board, the relevant expertise at the bank, the inflation-targeting regime, how they balance the various objectives of full employment, the inflation target and all the rest of it.”
The RBA handed down its eighth rate hike on Tuesday, pushing the cash rate to a decade high of 3.1%, in an effort to curb skyrocketing inflation.
Last week, Lowe apologised to borrowers who might regret taking out a mortgage based on his earlier comments that rates would stay low.
“I’m sorry that people listened to what we said and then acted on that and now find themselves in a position they don’t want to be in,” Lowe said. “Looking back, we would have chosen different language. People did not hear the caveats. I thought it was clear … but the community didn’t think it was clear. Well, they thought it was clear that we weren’t raising rates until 2024. That’s a failure on our part.”
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