Download the PDF
Following months of speculation, the Australian Federal Treasurer Jim Chalmers announced that Deputy Governor Michele Bullock would succeed outgoing Governor Philip Lowe as the new Governor of the Reserve Bank of Australia (RBA). In so doing, the Treasurer failed to extend Governor Lowe’s term as Australia’s top banker for the first time since it became the norm to extend the Governor’s tenure from the initial 7 years to 10 years, back in 2002 when Ian McFarlane was the first to have his term extended to 10 years.
What do we know about Michele Bullock? The RBA website shows that Michele Bullock joined the RBA in 1985 as an intern straight out of the University of New England, where she completed a Bachelor of Economics. Like many of her contemporaries, Ms Bullock went on the RBA sponsored graduate studies and obtained a Master of Science in 1989.
However, unlike a number of her RBA colleagues, such as Philip Lowe and Guy Debelle (for example), who obtained PhDs from top US schools such as MIT, Ms Bullock studied at the London School of Economics (LSE). Compared to the Economics faculties of the top US universities, the LSE has a decidedly left-wing tradition, having been founded in 1895 by members of the Fabian Society.
The choice by Treasurer Chalmers is an interesting one, especially coming off the Labor government-commissioned Review of the RBA, which was highly critical of the insular nature of the organisation and Governor Lowe’s (mis)handling of monetary policy over the Covid period – in particular his communication to markets (on behalf of the RBA) that the Bank would keep the cash rate at 0.1% until 2024. At the time of the decision to make this communication, Ms Bullock was a member of the RBA’s senior executive, as one of five Assistant Governors, with her specific remit as overseeing the Financial System.
As such, one would imagine that Ms Bullock was intimately involved in the RBA’s decisions during that time including the decision to communicate the lengthy period of expected near-zero interest rates. It was thought that this, and the fact that she is an RBA careerist, would work against her in winning the top job.
Of course, having an experienced central banker take over the reins in the midst of a monetary policy tightening cycle has its advantages in terms of continuity and market stability. There is also the fact that as a woman, Ms Bullock becomes the first female head of the RBA, in keeping with the government’s stated policy of greater female participation in the top echelon of the public service.
Will the change over from Governor Lowe to Deputy Governor Bullock be expected to produce significant change to the way the RBA sets monetary policy? Probably not.
However, this may be to underestimate Ms Bullock. Unlike her predecessor and his cohort of RBA economists, Ms Bullock did not come from the North American school of rationalist economists (now disparagingly know as neo-liberal economists, see Jim Chalmers’ essay Capitalism After the Crisis), but rather the softer left-leaning economists coming out of the UK during the Thatcher years.
Will this lead to a more socially attuned approach to monetary policy? For example, will it lead the RBA to take into account the distributional impacts of interest rate movements? Is an era of a more socially responsible central bank ahead?