Lowe blow as Albanese claims cost-of-living scalp

Outgoing RBA governor Philip Lowe. Picture: Britta Campion

Phil Lowe is as much a victim of his own ineptitude as he is a political scalp in the war on cost of living.

Few Australians are going to be feeling sorry for him today. And perhaps unfairly.

The outgoing central bank boss may have signed his own death warrant when he encouraged people into the property market before smashing them with rate rises.

But the Albanese government ensured the execution.

While Jim Chalmers resisted his colleagues, for the better part of the past 12 months, others around the cabinet table aided in the demonisation of Lowe.

In his press conference following the last rate rise, the Treasurer couldn’t help himself, suggesting that many Australians would be wondering why the RBA had raised rates again.

This was as strong a rebuke of the central bank boss from a Treasurer trying to also maintain the government’s commitment to the maintenance of independence. This was as much an expression of political frustration as it was an indication that there was no way the Albanese government was going to reappoint Lowe.

It needed a political scalp for the crisis it inherited. And the RBA boss fitted the bill.

But it is also now ironic in the knowledge that Lowe’s replacement, deputy governor Michele Bullock, is regarded by those who have dealt with her as equally if not more hawkish on inflation and the urgency in beating it than Lowe himself.

Which begs the question as to why Chalmers chose her as Lowe’s replacement and whether an appearance of change for change’s sake may end up being more troublesome for the government in the end.

All sides of politics, even the unions who she has taken issue with, have endorsed the appointment. A brilliant economist and a visionary, are the two devotions attributed to the RBA veteran.

Chalmers himself is said to have been highly impressed not only with Bullock but of Lowe’s personal endorsement of her – which speaks volumes to the character of Lowe as well.

But Bullock was also sitting right beside Lowe for the past 12 months with multiple sets of hands on the cash rate lever.

As Chalmers has admitted, it’s a fallacy to suggest Lowe was solely responsible for every decision of the RBA board. It’s a board after all.

Every interest rate rise is as much owned by Bullock as Lowe.

In her rare public statements, she has been as hawkish as Lowe on inflation, if not more so if her recent comments about unemployment being too low is a guide.

Some argue that Lowe was a dove in comparison, having gone too late and too low on rates from the outset.

The fact the markets rose on the announcement of her appointment is surely a good sign.

Bullock has enough distance as deputy to be a politically credible replacement. She never endorsed Lowe’s comments about rates staying near zero until 2024.

Bullock has been at the RBA for 38 years. Lowe for 43. It’s hard to conceive of a better transition.

Chalmers has ensured bi-partisan support. Another crucial element.

And it is to Chalmers’ credit that he also resisted the option of a public service replacement that could have undermined the perception of the bank’s independence.

Chalmers should be commended for the decision he made and the temptations he resisted in ensuring the maintenance of the bank’s independence, knowing that the result won’t make it any easier for the government’s management of the retail politics embedded in further interest rate rises – whether they publicly belong to Lowe or Bullock.