First female RBA governor to bring ‘reform agenda’

The first woman to fill the role of Reserve Bank governor is expected to bring a reform agenda to the institution and outline a fresh set of goals.

Michele Bullock starts as head of the central bank in September, replacing Philip Lowe.

Ms Bullock’s elevation comes as the Reserve Bank moves to implement reforms including fewer board meetings each year and the governor having to front media to explain the bank’s decision making.

The new governor will also work alongside the treasurer to refresh the “statement on the conduct of monetary policy”, which essentially lays out the high-level goals of the central bank.

The guiding document is typically updated with every change of government and the last one was signed by then-treasurer Scott Morrison and Dr Lowe in 2016.

The next statement will be signed by the new monetary policy board – not just the governor, as in the past – and is expected to be finalised later in 2023.

The document critically includes the inflation-targeting framework, although the flexible two-to-three per cent band is likely to stay after it earned the support of the review board.

Monash University economics lecturer Isaac Gross said there could be a stronger focus on hitting the midpoint of the target range, as the review suggested, rather than treating anywhere in the target band as equally acceptable.

The RBA may shy away from that change or couch it in caveats for fear it could imply a quicker rate of inflation reduction and more rapid rate rises, Dr Gross said.

He was more confident that any mention of “financial stability” would be played down in the statement.

“The review found it was probably not a great idea because it meant the RBA would start to worry more about house prices than unemployment and inflation.”

He said it would still likely get a mention but would become a secondary consideration after full employment and price stability.

Finance Minister Katy Gallagher said Ms Bullock’s appointment was historic but the position would carry considerable scrutiny, with mortgage holders under pressure from rising interest rates.

“She does have a reform agenda … she’s got the leadership skills necessary to guide that path over the next few years, so it’s an incredibly important appointment,” Senator Gallagher told ABC Radio on Monday.

Senator Gallagher said more transparency was needed from the bank around its decisions on interest rates, but Ms Bullock would be well equipped for the role.

Ms Bullock has worked at the Reserve Bank since 1985, became an assistant governor in 2010 and has been the deputy since 2022.

Shadow treasurer Angus Taylor welcomed Ms Bullock’s appointment, saying having a governor independent of the government was crucial.

The opposition opposed the prospect of federal department secretaries being appointed as Reserve Bank governor.

“We know historically an independent Reserve Bank delivers lower inflation, the data on this has been very, very clear for many decades around the world,” Mr Taylor told ABC Radio.

“It’s not appropriate to have a secretary of an economic department who has been formulating government policy to become the governor.”


Andrew Brown and Poppy Johnston
(Australian Associated Press)


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