New RBA governor announced

Following a cabinet meeting on Friday morning (14 July), Prime Minister Anthony Albanese and Treasurer Jim Chalmers named Michele Bullock as the next governor of the Reserve Bank of Australia.

She will become the first female governor of the RBA when she takes over the role from Mr Lowe, who will end his seven-year term in September.

Her new role will begin on 18 September and run for a seven-year term.

Ms Bullock, currently the deputy governor of the central bank, has been with the RBA since 1985.

She is deputy chair of the Reserve Bank Board and deputy chair of the Payments System Board and a member of Chief Executive Women (CEW). Prior to her current role, Ms Bullock was the assistant governor (financial system).

Ms Bullock also held a variety of senior management positions in the bank. She was assistant governor (business services), assistant governor (currency), adviser for the Currency Group, and, before that, head of payments policy department.

The Prime Minister and Mr Chalmers both stated she was the “right person” for the job.

Mr Chalmers said: “We are confident that Ms Bullock will provide the strong leadership and stability necessary for the RBA to navigate an increasingly complex and rapidly changing economic environment.”

He added that her appointment comes “after a long, methodical, considered, and consultative process which led the cabinet endorsing the Treasurer’s recommendation today” (14 July).

Commenting after the announcement, Ms Bullock said: “I am deeply honoured to have been appointed to this important position. It is a challenging time to be coming into this role, but I will be supported by a strong executive team and boards. I am committed to ensuring that the Reserve Bank delivers on its policy and operational objectives for the benefit of the Australian people.”

Mr Lowe will continue in his position until the end of his term on 17 September 2023.

The outgoing governor commented: “The Treasurer has made a first-rate appointment. I congratulate Michele on being appointed governor.

“The Reserve Bank is in very good hands as it deals with the current inflation challenge and implementing the recommendations of the review of the RBA. I wish Michele all the best.”

Mr Albanese and Mr Chalmers both thanked Mr Lowe for his tenure, acknowledging the “outstanding commitment he has given to the RBA over his 43 years there”.

“We respect and appreciate the remarkable dedication and contribution he has made to our country and our economy and the way he has conducted himself in a difficult role at a challenging time,” they added.

The role of Reserve Bank governor comes with several responsibilities, including chair of the Reserve Bank Board, the Payments System Board, and the Council of Financial Regulators.

As governor, Ms Bullock will also be responsible for the management of the bank under the Reserve Bank Act 1959.

The position of deputy governor from 18 September 2023 will be filled by the Treasurer in due course.

RBA shake-up

The central bank is set to undergo a shake-up, with the central bank recently announcing its decision to implement 10 recommendations from a wide-ranging review into the Reserve Bank (RBA), An RBA fit for the future.

Overall, the central bank has agreed action to the following 10 decisions:

• From 2024, the board will meet eight times a year, rather than 11 times as is currently the case. Four of the meetings will be on the first Tuesday of February, May, August, and November, with the others held in between. The exact dates for 2024 will be published soon.
• The board meetings will be longer than is currently the case, they will typically start on the Monday afternoon and then continue on the Tuesday morning. The outcome of the meeting will be announced at 2.30 pm on the second day, typically a Tuesday as is the case now.
• All board members will have the opportunity to attend an internal staff meeting some time before the board meeting. This will allow them to hear directly from, and ask questions of, a broader range of staff.
• The post-meeting statement announcing the decision will be issued by the board, not, as is currently the case, the governor.
• The governor will hold a media conference after each board meeting to explain the decision. The media conference is expected to be held at 3.30 pm.
• The quarterly Statement on Monetary Policy will be released at the same time as the outcome of the board meeting (in February, May, August, and November), rather than on the following Friday as is currently the case. Given this and other changes, we are reviewing the structure of this document.
• The board, rather than just the governor, will be the signatory to the Statement on the Conduct of Monetary Policy, which is the document that records the common understanding on monetary policy between the RBA and the Australian government. The new statement is expected to be finalised later this year.
• The board will oversee the bank’s research agenda as it relates to monetary policy and aspects of financial stability.
• The bank will continue with its current approach to climate change analysis, focusing on the implications of climate change for the economy, inflation, and the financial system.
• The board will work with the Treasury to undertake five-yearly open and transparent reviews of the monetary policy framework.
• The review had also called for the creation of two RBA boards – one to set the cash rate and another for governance.

The three reviewers were critical of the current board structure, stating: “Currently, the Reserve Bank Board provides only limited challenge to the RBA executive’s view and its skill set is not matched to the complex and uncertain economic environment in which monetary policy will increasingly operate. The external members of the board have been outstanding leaders in their fields. However, collectively they have less economic and financial market expertise and spend less time on monetary policy than decision-making bodies at comparable central banks.

“Monetary policy involves making technical judgements and important trade-offs in an uncertain environment. Combining the judgement of a group of people with deep and relevant expertise provides the best chance of achieving good outcomes. The review seeks to raise the collective economic and financial expertise of monetary policy decision-makers while recognising the importance of retaining diverse perspectives and knowledge.”

[Related: RBA to embark on ‘significant’ cultural change]