Philip Lowe replaced as Reserve Bank chief by deputy Michele Bullock

Philip Lowe has been replaced as Reserve Bank governor by the country’s first female central banker, a 38-year veteran of Australia’s premier interest rate setting body. 

Michele Bullock, who only became Dr Lowe’s deputy little more than a year ago, is taking taking over on September 18, following her appointment by Treasurer Jim Chalmers.

Ms Bullock is also the first Labor-appointed Reserve Bank boss since 1989 and the first woman to lead the RBA since it formed in 1960.

‘She is an outstanding economist and leader with a deep understanding of the RBA’s role and operations, built up over her long and distinguished career with the central bank,’ Dr Chalmers said on Friday morning.

‘Ms Bullock will make history as the first woman to lead the RBA in its 63-year history.

‘Her appointment strikes the optimal balance between providing exceptional experience and expertise and offering a fresh leadership perspective.’

Ms Bullock’s appointment was announced on Friday morning just 15 months after she replaced Guy Debelle as the RBA’s deputy governor, when he quit to work for billionaire mining magnate Andrew Forrest’s renewable energy group Fortescue Future Industries.

She joined the Reserve Bank as an intern in 1985 after completing a Bachelor of Economics with Honours at the University of New England. 

She later did a masters degree at the London School of Economics. 

In her 38-year career with the RBA, she has been in charge of the central bank’s payments policy department, and overseen the currency, business service and financial system areas. 

She has only attended RBA board meetings since April 2022 but was present the 12 meetings where it was decided to raise rates, marking the most aggressive monetary policy tightening since 1989. 

Ms Bullock will now be the first RBA governor to preside over a specialist monetary policy board, following a review into the Reserve Bank. 

From next year, the Reserve Bank under her will be meeting eight times a year instead of 11, with Ms Bullock set to front a media conference after each decision. 

She is also one of the few women to lead a central bank, with her appointment coming nine years after Janet Yellen was appointed chair of the US Federal Reserve.

Ms Bullock beat two other leading contenders – Treasury secretary Steven Kennedy who already sits on the RBA board, and Department of Finance secretary Jenny Wilkinson who previously worked at the Reserve Bank. 

Dr Chalmer’s decision not to extend Dr Lowe’s seven-year term beyond September 17 means Dr Lowe is now Australia’s shortest-serving RBA chief in almost three decades.

Under Dr Lowe’s watch, interest rates have gone up 12 times since May 2022, even though he suggested in 2021 they would stay on hold at a record-low of 0.1 per cent until 2024 ‘at the earliest’.

Michele Bullock, his deputy, is his replacement, making her Australia’s first-ever female RBA governor when she starts on September 18 (she is pictured with former Liberal treasurer Josh Frydenberg in March 2022 after she was appointed deputy governor)

Dr Lowe was also the first RBA chief since 1991 to be in charge during a recession, as a result of the 2020 Covid lockdowns that also led to deflation.

But by the end of 2021, inflation breached the RBA’s two to three per cent target and kept climbing in 2022 after Russia’s Ukraine invasion led to sanctions which pushed up global crude oil prices. 

Inflation hit a 32-year high of 7.8 per cent at the end of last year but has since moderated, with the Reserve Bank expecting inflation to stay high until mid-2025.

Economists fear the Reserve Bank’s 12 rate rises in just 13 months could spark a recession, repeating the experience of 1989 when tighter monetary policy caused a downturn in 1991.

Bernie Fraser, the last Labor-appointed RBA governor in 1989, didn’t have his term extended in 1996 by new Liberal treasurer Peter Costello. 

Dr Lowe is the first Reserve Bank boss to only serve seven years since Mr Fraser finished.