The Reserve Bank of Australia (RBA) is in for a major shake-up, as outgoing governor Philip Lowe makes his final interest rate call today.
Current deputy-governor Michele Bullock, who was announced as Lowe’s successor back in July, will take the top job from September 18.
Here’s what you need to know about the RBA changes.
Also read: RBA's dim forecast for the Aussie economy
Why is Philip Lowe being replaced?
Philip Lowe’s seven-year term as RBA governor will expire on September 17.
RBA governors are appointed by the treasurer for terms of up to seven years, but there is no limit on the number of terms they can serve. The most recent two had their terms extended by three years.
Lowe has faced heavy public criticism, as well as calls for his resignation, over the RBA board’s decision to aggressively hike interest rates to rein in inflation.
Lowe also previously stated interest rates would not rise until 2024. He later apologised to those who took out mortgages - based on his statements - and “now find themselves in a position they don’t want to be in”.
The cash rate rose from a record low of 0.1 per cent to 4.1 per cent in just over a year. Borrowers with a $500,000 mortgage over 30 years are now forking out an extra $1,217 in monthly repayments as a result of the rate hikes.
Who is Michele Bullock?
Michele Bullock will become the ninth RBA governor on September 18 and will be the first female governor in the central bank’s 63-year history.
Bullock joined the RBA in 1985 as an analyst and has held a number of senior positions at the bank, including being made an assistant governor from 2010 and becoming deputy-governor in April last year.
Treasurer Jim Chalmers said Bullock’s appointment struck the “optimal balance between providing exceptional experience and expertise and offering a fresh leadership perspective”.
What other RBA changes are coming?
From 2024, the RBA board will only meet eight times a year - instead of the current 11 - to set interest rates.
Four of those meetings will occur on the first Tuesday of February, May, August and November. The remainder will be held midway between those dates, on March 19, June 18, September 24 and December 10.
The meetings will be longer, typically starting on the Monday afternoon and then continuing on the Tuesday morning, with the rate decision to be announced on the Tuesday afternoon at 2:30pm.
The RBA governor will also hold a press conference at 3:30pm after every board meeting to explain the interest rate decision to the public.
These are some of the big changes to the RBA, which were among 51 recommendations as a result of the RBA Review.
Bullock will be responsible for overseeing the implementation of the recommendations.