Philip Lowe is the first governor in nearly thirty years not to have his tenure extended.
Treasurer Jim Chalmers and Prime Minister Anthony Albanese announced on Friday Dr Lowe’s term as governor of the Reserve Bank of Australia would in September, after serving in the top post for seven years.
Michelle Bullock will become the ninth governor of the RBA, with her seven-year term beginning on September 18.
Both of Dr Lowe’s predecessors, Glenn Stevens and Robert Macfarlane, had their terms extended to ten years, and while that same option was available to the government for Dr Lowe, they have opted for a change of leadership.
Dr Lowe’s infamous promise to Australians, made as late as 2021, that interest rates would not rise again until “at least 2024”, is likely to have been a key factor in the cabinet’s decision on whether or not to keep Dr Lowe in the role.
In March 2021, Dr Lowe said: “Our judgment is that we are unlikely to see wages growth consistent with the inflation target before 2024.
“This is the basis for our assessment that the cash rate is very likely to remain at its current level until at least 2024.”
Dr Lowe’s statement prompted thousands of Australians to take advantage of the record low cash rate of 0.1 per cent.
But that cash rate has increased 400 points since May 2022 and currently stands at 4.1 per cent.
Earlier this year, Mr Albanese made a dig about Dr Lowe’s now-notorious statement.
When questioned on why the budget papers had predicted the cash rate would remain at 3.85 just a month before the Reserve Bank hiked the rate to 4.1 per cent, Mr Albanese gave a lighthearted – if unprompted – gibe directed at Dr Lowe.
“That’s not the only prediction on interest rates that has not been correct. It’s not as incorrect as the ones saying there’d be no increases till 2024, so these things are all relative,” he said.
At senate estimates last year, Dr Lowe apologised for misguiding Australians.
“I‘m sorry that people listened to what we’ve said and acted on that, and now find themselves in a position they don’t want to be in,” Dr Lowe said.
“But at the time, we thought it was the right thing to do. And I think looking back, I would have chosen different language.
“People did not hear the caveats in what we said. We didn’t get across the caveats clearly enough, and the community heard 2024. They didn’t hear the conditionality.
“That’s a failure on our part, we didn’t communicate the caveats clearly enough, and we’ve certainly learned from that.”