Reserve Bank boss Philip Lowe to learn in weeks if he will keep top job after brutal poll

Reserve bank chief Philip Lowe will discover his fate within weeks after a brutal poll showed that more than half of the country want him removed from the top job.

Dr. Lowe has come under heavy scrutiny for raising interest rates 12 times in the past 13 months, putting mortgage holders under severe financial strain.

The embattled Reserve Bank governor suggested in 2021 that interest rates would remain at an all-time low of 0.1 percent until 2024 at the earliest, only for rates to rise at their most aggressive pace since 1989.

Dr. Lowe’s seven-year term expires on Sept. 17, and if his term is not renewed, he would be the shortest-serving RBA boss in nearly three decades.

Treasurer Jim Chalmers has revealed he will announce next month whether Dr Lowe will remain in office or a new governor will be appointed – amid speculation a woman will soon take the top job.

“My intention is to reach a final position on the RBA governor and announce it in July, but certainly before parliament returns – that has always been our intention,” Dr Chalmers said on Thursday.

“The current term of the RBA governor ends in September.

“We’ve been saying for a while that we would consider that appointment around the middle of the year, now it’s around the middle of the year.”

Dr. Chalmers said it was a “big decision” to make and that he was in “consultation with my cabinet colleagues and with others.”

“And so we’ll work through it in the usual methodical and deliberate way,” he said.

“It is my intention to reach a judgment in the coming weeks, preferably to announce the outcome in July, but certainly before parliament returns.”

The treasurer reiterated his position on “finalizing an opinion” on Dr. Lowe’s tenure next month when he was interviewed on ABC’s Radio National.

He told host Patricia Karvelas that he “regarded Dr Lowe very highly” as he had a difficult job to do, and stressed that there was no suspected rift between the government and the central bank over rate hikes.

“The point I was making is that I cherish the independence of the Reserve Bank,” he said.

“I’ve made that clear several times. I think it’s an important feature of our system.’

“And part of that means I explain and defend the decisions I make on fiscal policy, and the governor and the board explain and defend the decisions they make on monetary policy, and that’s appropriate.”

Interest rates are at an 11-year high of 4.1 percent, with monthly variable mortgage payments already 62 percent higher than just over a year ago.

Federal Treasurer Jim Chalmers (pictured) will announce next month whether Dr. Lowe will retain his position as head of the central bank or appoint a new governor

Interest rates are at an 11-year high of 4.1 percent, with monthly variable mortgage payments already 58 percent higher than just over a year ago (stock image)

It comes after a poll of nine newspapers published last week found that 52 percent of respondents think Dr. Lowe would have to lose his $1 million a year job as governor.

Only 17 percent of the survey’s 1,600 respondents said Mr Lowe’s term should be extended.

If Dr. Lowe’s term is not renewed, he would be the shortest-serving governor since Bernie Fraser’s term ended in 1996.

Mr. Fraser was the governor who presided over 18 percent interest rates in November 1989 and was the last governor whose rate hikes led to a recession.

The 1991 recession was the last to be triggered by aggressive rate hikes. It was another 29 years before the 2020 recession, which covered the summer wildfires and Covid lockdowns.

Westpac, NAB and ANZ expect two more rate hikes that would take the spot rate to a 12-year high of 4.6 percent, up from an 11-year high of 4.1 percent now.

AMP chief economist Shane Oliver has said rate hikes could plunge Australia into recession in 2023 or 2024.

RBA Deputy Governor Michele Bullock and Treasury Secretary Jenny Wilkinson have been touted as possible replacements for Dr. Lowe.

April’s inflation rate of 6.8 percent was well above the RBA target of 2 to 3 percent and the Reserve Bank expects it to remain at high levels through mid-2025.

Dr. Chalmers commissioned a review of the RBA last year and issued his recommendations in April, including the creation of a specialized monetary policy council made up of economists that would set interest rates.

Labor, with opposition support, will introduce legislation amending the Reserve Bank Act of 1959 so that the government cannot reverse its interest rate decisions.