Reserve Bank of Australia Governor Philip Lowe announces permanent changes

The embattled Reserve Bank governor, Philip Lowe, has revealed the key changes that will affect Australia’s main rate-making body following a review.

Starting next year, the RBA would hold eight board meetings instead of 11, with decisions in February, May, August and November being made on the first Tuesday.

“We will be announcing dates for future meetings well in advance,” Dr Lowe told an Economic Society of Australia luncheon in Brisbane.

Meetings will take place from Monday afternoon to Tuesday morning with a media conference at 3:30 p.m. after each meeting, one hour after the interest rate decision.

“The board meetings will be longer than they are now,” Dr Lowe said.

An unassigned vote will also be made public on the views of the nine board members on monetary policy.

But unlike now, the board, rather than the governor, will sign the interest rate decisions.

A specialized monetary policy team, made up of economists, would make decisions, rather than the current approach where corporate leaders are also asked for input.

Dr. Lowe, who will be replaced when his seven-year term expires on Sept. 17, said Wednesday he was happy with his job.

“I don’t know if I am the happiest central banker, but I am the most fortunate,” he said.

“If I were asked to continue my position, I would do so with honor.”

Dr said that if his term is not extended, ‘I will do my best to support my successor’.

He is threatening to become the shortest-serving governor in nearly three decades after suggesting that interest rates in 2021 would remain at a record low of 0.1 percent until 2024 “at the earliest.”

But interest rates have risen 12 times since May 2022 to an 11-year high of 4.1 percent, the most aggressive pace of monetary tightening since 1989.

The Reserve Bank expects inflation to remain above its target of 2 to 3 percent through mid-2025, with the consumer price index moderating from 6.8 percent to 5.6 percent in May.

“We’re dead serious about this,” Dr Lowe said Wednesday.

“I am confident that the higher interest rates will work.

“How much do we still have to do and I’m open to that question.”

Before Dr Lowe’s term expires, Treasurer Jim Chalmers has confirmed that he will travel to India for the G20 summit with the Chief of the Reserve Bank.

“I am traveling to India with Governor Lowe,” he told reporters in Melbourne on Wednesday.

“He and I will work closely together to represent Australia’s interests in that forum.”

Reducing the number of RBA board meetings to eight per year would bring it into line with the US Federal Reserve, the Bank of England and the Bank of Canada.

The recommendation was contained in a 282-page review conducted by Professor Carolyn A. Wilkins, a former senior vice governor at the Bank of Canada; Professor Renée Fry-McKibbin, Professor of Economics at the Australian National University; and Dr. Gordon de Brouwer, Secretary for Public Sector Reform.

Dr. Lowe’s deputy Michele Bullock; Treasury Secretary Steven Kennedy, who also sits on the RBA board; and Treasury Secretary Jenny Wilkinson, who previously worked at the RBA, are the main contenders to become the next RBA governor.