RBA boss Philip Lowe to deliver last speech before review decision made

D-Day looks nigh for RBA boss Philip Lowe, who told homeowners interest rates wouldn’t go up until 2024.

RBA Governor Philip Lowe is set to deliver his last speech today before finding out whether he will be replaced in a huge shake up.

The central banker who infamously predicted interest rates would not go up until 2024 will outline the RBA’s official response today to a major review in a speech in Queensland.

Dr Lowe, who earns $1 million a year including super, is widely expected to be replaced when his term expires in this year and a decision is expected as early as this week.

The leading candidates for the job are Treasury Secretary Steven Kennedy, Finance Secretary Jenny Wilkinson, RBA deputy Governor Michele Bullock and Dr Lowe himself who has said he would do a second term if asked.

Under the planned changes, the current RBA board will be stripped of its power to set interest rates.

Dr Lowe will make an address at the review in Queensland today. Picture: NCA NewsWire / Martin Ollman

It will be replaced with a panel of monetary policy experts that will meet eight times a year instead of 11 and conduct “more in-depth discussions including of the forecast, strategy and other monetary policy issues.”

In a major speech outlining his own plans to introduce the nations first “wellbeing” measure, Treasurer Jim Chalmers will defend an expected $20bn surplus for last financial year as inflation fighting and part of Labor’s “hard heads and soft hearts” approach.

“Our efforts to strengthen the budget have not in any way come at the expense of helping people,” he said.

“The bigger surplus is in addition to, not instead of, cost of living relief.”

Dr Chalmers will also pledge that the “mean-spirited madness” of robodebt welfare debts will never happen again.

The RBA review that Dr Lowe will respond to in his own speech today notes the difficult environment the bank has worked in during recent years, but urges it to hold more in-depth discussions and seek more input from outsiders.

Treasurer Jim Chalmers has previously insisted the review was not about ‘taking shots at anyone’.

“It is no secret that Philip Lowe has had a difficult job to do and Reserve Bank board has had to make a series of difficult decisions and what I have tried to do as Treasurer and before that as well is not to pre-empt or second-guess decisions made by the Reserve Bank board,” he said.

But critics including Christopher Joye, a portfolio manager with Coolabah Capital who previously worked at Goldman Sachs and the RBA, have argued change was long overdue.

“So what’s happened is because of their heinous forecasting track record, and because of terrible policy mistakes, they have been left with no choice. To be clear, it wasn’t voluntary,’’ Chris Joye said.

Federal Treasurer Jim Chalmers has said the review was not about ‘taking shots’. Picture: Dan Peled / NCA NewsWire

“One classic example is Phil Lowe told the world that he wasn’t going to raise rates until 2024. He says that wasn’t a promise.

“He told everyone to go borrow and spend like drunken sailors because he had their backs. And that’s obviously not what transpired.”

“But there’s been a broader structural problem which has been for decades. Everyone has known that they’ve been incredibly insular, incredibly arrogant, resistant to any form of criticism.

“The issue with the RBA is that it’s one of the most insular and hierarchical organisations that exists anywhere in the world. They have been incredibly hubristic and an arrogant organisation that for decades would never admit that they’re wrong, or that they had forecast incorrectly.

“Basically, it’s like an internal cult where people are promoted based on tenure. And it’s extremely resistant to both internal debate and dissent and external criticism.”

Originally published as RBA boss Philip Lowe to deliver last speech before review decision made