Philip Lowe, a globally respected economist widely regarded as one of the best central bankers of his generation, has been given the job of running the Reserve Bank of Australia just as it enters unprecedented territory with record-low interest rates and the sudden spectre of deflation.
…”Dr Lowe is well regarded in the central banking community, financial markets, and the Australian business community, and will reinforce existing confidence in the institution,” Mr Morrison said.
From the AFR:
Mr Bowen echoed the sentiment, saying that had he been asked by Mr Morrison, he would have unreservedly recommended Dr Lowe.
…More controversially, the treasurer also revealed that board member John Edwards, a former chief economist for HSBC and advisor to former prime minister Paul Keating, will be replaced early by Professor Ian Harper, who recently headed the government’s competition policy review.
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A clear opportunity for Australia to draw a line under the RBA’s corrupt past and address its broken culture has been missed. It will now be done internally by My Lowe, if there is any of the old firebrand left in him, or not at all. There is some hope of independence of thought given Mr Lowe was the young tearaway at the BIS in the early 2000s that challenged the Greenspan doctrine of never addressing asset bubbles. That may also mean the bank will increase its sensitivity to Australian house prices though whether Mr Lowe has it in him to push macroprudential targeting forward I can’t say. In theory, he should be less hostile to it than Captain Glenn.
Mr Rainbow gets the bone for his five effort. Strangely Captain Glenn allowed Mr Rainbow to become the default spokesman for the bank, which was a mistake given his benign demeanor and uber-optimism had a tendency to put a rocket under the Australian dollar every time he spoke.
Ian Harper is certainly qualified to take his position and is almost certainly less inclined towards rainbows and unicorns with his conservative history at the Fair Work Tribunal and the recent Competition Review so that is a good thing.
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The two appointments are probably a tilt in the bank towards greater focus on reform and asset prices but only time will tell if that means greater innovation in monetary tools or more cash rate hawkishness.
