Dr Phillip Lowe: Reserve Bank boss’s suprisingly humble beginnings – and how he nearly died twice

He’s the head of the Reserve Bank hated by millions of mortgage holders for his wrong predictions about interest rates, but Phillip Lowe has a little-known rags-to-riches story, nearly dying twice in one year as governor. .

The weight of the Australian economy is firmly on Dr Lowe’s shoulders as he hits mortgage holders with a ninth successive interest rate hike to stem rising inflation while trying to prevent the nation from being thrust into a painful recession.

Dr. Lowe, who predicted in 2021 that interest rates would stay at record lows through 2024, raised the official cash rate to a 10-year high of 3.35 percent (from 3.1 percent) on Tuesday. .

The decision was made in a desperate attempt to rein in skyrocketing inflation, but it could spell disaster for families struggling to make ends meet amid soaring house payments.

Despite his high public profile, the banker is carefully reserved and rarely talks about his humble beginnings.

Born to a schoolteacher mother and small business owner father, Dr. Lowe grew up in Wagga Wagga, in the Riverina region of NSW, the eldest of five children.

He attended the local schools St Michael’s Regional High School and Trinity Catholic College, where he excelled and obtained the dux in both.

Dr. Lowe was inspired to enter the banking industry by his enthusiastic economics teacher, Ms. King, and decided to continue in mid-12th year.

However, his parents could not afford to send him to university, so with the help of Mrs. King, he successfully applied for an RBA scholarship to UNSW, where he took night classes while doing administrative work for RBA at the 17 years.

He did so well in his first-year exams that the bank told him to study full-time, and he graduated with first-class honors and the University Medal in 1985.

Dr. Lowe then began working at the bank full-time, and was later sent by the RBA to the Massachusetts Institute of Technology from 1987 to 1991, where he earned a Ph.D. in economics.

While working at the RBA, Dr. Lowe met his wife, Jocelyn Parker, who now works as a Principal Analyst for Australia’s Prudential Regulation Authority.

The couple have three children.

Dr. Lowe held various positions with the RBA from the late 1990s until he was appointed Lieutenant Governor in 2012.

In May 2016, former Prime Minister Scott Morrison (who was then Treasurer) announced him as the successor to Glenn Stevens as head of RBA.

Although that year marked a major milestone in Dr. Lowe’s career, it was also plagued with major health problems.

After walking offstage after a speech at a financial stability conference in Canada, less than 12 hours after hearing from Mr. Morrison about his upcoming promotion, Dr. Lowe collapsed.

He was rushed to the hospital fighting for his life as his carotid artery ruptured causing a blood clot in his neck.

Emergency surgery was performed to save his life and he was placed in intensive care, until he was given the go-ahead to fly back to Australia two weeks later.

Three weeks after returning to Sydney, Dr. Lowe had another near-death experience.

While recovering at home, he collapsed again and his family rushed him to the hospital, where doctors determined the aspirin he had been taking to thin his blood after the stroke ate away at his stomach lining, causing internal bleeding.

The bleeding was difficult to contain and his family was told to prepare for the worst, but after 10 days in the hospital, and many blood transfusions, he finally made a full recovery.

“I had top-notch medical care at both St Vincent’s and Ottawa Hospital. If I lived anywhere else in the world, I probably wouldn’t have survived either of those things,” he told AFR in July 2022.

“I survived with no long-term ramifications thanks to top-notch medical care.”

Today, the 61-year-old maintains a healthy and fit lifestyle, swimming a mile or two at least three times a week, riding his bike and enjoying rounds of golf with his son on the weekends.

The Reserve Bank’s $1M-a-year man walks out of his $4M house to raise interest rates for the ninth time after claiming they’d stay low through 2024: Here’s what it means for YOUR bills

• Reserve Bank Governor Philip Lowe at Sydney home
• The board he leads has raised interest rates to 3.35 percent.
• Average Mortgage Repayments Increase $12,000 a Year

BY STEPHEN JOHNSON, BUSINESS REPORTERS, DAILY MAIL AUSTRALIA

The Reserve Bank governor looked relaxed as he left his luxurious Sydney home on Tuesday before inflicting more pain on millions of Australians and raising interest rates for the ninth straight month.

Philip Lowe and his board raised the official cash rate to a new 10-year high of 3.35 percent (from 3.1 percent now) in a desperate attempt to rein in skyrocketing inflation.

Dr. Lowe, 61, predicted in 2021 that interest rates would stay at record lows through 2024.

But since then, borrowers with an average mortgage of $600,000 have seen their payments increase by a staggering $12,000 a year.

Before the crucial meeting, Dr. Lowe was seen leaving his Randwick home in the city’s east, where the median home price is $2.9 million.

Just steps from Coogee Beach, the property with its park-like garden and wrought-iron fence would conservatively be worth at least $4 million.

The married father of three was photographed with a copy of The Australian Financial Review before setting off in his latest model Volvo XC40.

Unlike millions of other borrowers, the powerful banker, who has a total compensation package of $1,037,709 and a base salary of $890,252, is largely shielded from the worst cost-of-living crisis in more than three decades.

His wife now works at the Australian Prudential Regulation Authority, which sets the rules on bank lending as rates continue to rise.

The Dr. Lowe Reserve Bank board is widely forecast to raise the cash rate on Tuesday by 0.25 percentage points, or 25 basis points.

But the Commonwealth Bank, Australia’s biggest home lender, is warning borrowers to expect a potential 0.4 percentage point rise that would bring the cash rate to 3.5 percent.

Inflation is at its worst level in 32 years and there are fears that this rate hike is far from the last.

Since May, the RBA has raised interest rates eight times, with the 300 basis point increases in 2022 marking the most severe monetary policy tightening since a target cash rate was first published in 1990.

Dr. Lowe apologized to homeowners who applied for home loans based on his forecast that rates would not increase for several years.

“I am certainly sorry if people listened to what we said and acted on what we said and are now sorry for what they did,” he told a parliamentary committee in November.

“That’s unfortunate and I’m sorry it happened.”

The end of the record 0.1% cash rate means that borrowers with an average mortgage of $600,000 would have seen their monthly payments this month rise to $3,303, $997 up from $2,306 in early May.

Even if rates didn’t increase any further after February, this borrower’s annual payments would be $11,964 higher than they were before the rate increase.

A couple with a $1 million mortgage would have seen their monthly payments increase by $1,661, from $3,843 to $5,504, which works out to $19,932 for one year.

That’s based on a Commonwealth Bank variable rate, for a borrower with a 20 percent deposit, rising to 5.22 percent in February from 2.29 percent in May 2022 before the rate increases. within 30 years.

Canstar finance expert Steve Mickenbecker said rising mortgage rates were causing the biggest pain in the family budget.