CORRECT: Increased Talk Of Replacing Lowe, But Who With?

*Wording of last sub bullet has been revised.

Articles appeared today in The Australian and AFR regarding the chances of RBA Governor Lowe’s term being extended for 3 years when it finishes in September. There is a belief that many in the government do not like the continued rate increases and want Lowe replaced, but the central bank is independent and has an inflation mandate and with inflation so far above target it has had no choice but to tighten policy. He was appointed by the previous government. Maintaining central bank independence remains vital.

• Currently a review is underway of the central bank and its processes and there is some thought that Lowe could be replaced if he doesn’t agree with all of the recommendations and that one of the three members of the panel could take over, but they are all RBA outsiders.
• Even if the government wants to replace Lowe, and it is worth noting that he gets along well with Treasurer Chalmers who will make the decision, there isn’t an obvious successor.
  • It had been assumed that former deputy governor Debelle would take over but he resigned but he could always return.
  • Current deputy governor Bullock has only been in the position since April last year and it is likely that it is felt that she needs more time before becoming governor.
  • There are options from other public areas such as Treasury, Finance and the ABS, but it is unclear Chalmers would want to change the leadership he currently works with.
  • The RBA has not had a foreigner as governor before, unlike the Bank of England.