VIEW: Analysts See Bullock As Continuing Lowe’s Policy Strategy

Sell-side analysts have commented on the appointment of Deputy Governor Bullock as current Governor Lowe’s replacement on September 18. This internal choice allows for continuity, especially since she has been a part of all the current tightening cycle’s decisions, and signals a preservation of the central bank’s independence. Economists are also noting many of Lowe’s achievements.

• Westpac believes that Bullock is a “first rate choice” as the new RBA Governor with an “unusual instinct for identifying the important issues of the day”. It believes that she will be well placed to implement reforms of the central bank. But it will remain to be seen if she is more or less “hawkish” than Lowe but Westpac thinks that “the path Lowe has set for policy will be equally promoted by Bullock” over the medium term. It still expects a 25bp hike in August with another likely in September.
• NAB expects Bullock will be seen as “less theoretical” than Lowe. It believes the appointment will have “few implication for monetary policy in the near term”. The two leading candidates for Deputy Governor are likely to be Assistant Governor Kent or Jones. NAB notes that recent RBA comments signalled a “greater concern for the outlook for the economy”.
• JP Morgan has said “with Deputy Governor Bullock, the lack of policy implications is more a case of what we do know: demonstrated consistency of her remarks with Lowe’s strategy so far”. It continues to forecast one more hike in August.
• Goldman Sachs also believes that the appointment doesn’t have “major implications for policy” but it notes that “Bullock delivered a speech in June that we viewed as incrementally hawkish”. Goldmans expects a hike in August followed by both November and December.