Treasurer Jim Chalmers is expected to announce the successor to Reserve Bank governor Philip Lowe within days.
Deputy governor Michele Bullock is regarded as the leading internal candidate to replace Lowe if he is not reappointed, while Treasury secretary Stephen Kennedy and Finance Department counterpart Jenny Wilkinson are seen as likely contenders if Chalmers opts to appoint someone from the public service.
The Australia Institute’s executive director Richard Denniss favours appointing an outsider who would be able to creatively tackle inflation.
“Wilkinson or Kennedy, as people coming from outside the RBA, have the potential to help it adapt to new challenges that it’s been struggling with”, Denniss said.
While Shane Oliver of AMP Capital says the main challenge for the new governor will be to ensure that inflation continues to fall while avoiding a recession.
“From an economic point of view, Lowe should have his term extended because we’re halfway through a battle to curb inflation”, Oliver said.
“But the common speculation is that Lowe will be replaced. The main challenge will be for the governor to make sure that inflation continues to fall, but also to avoid a recession”.
I worked with Steven Kennedy at the Australian Treasury in 2003-04 in the Macro Economic Division. He was a good operator.
However, bringing him across from Treasury is a bad look for an RBA supposedly being reformed. The same goes for Jenny Wilkinson.
Assistant governor Michelle Bullock is part of the problem and even worse.
The RBA needs a genuine outsider with strong integrity. Someone with a genuine outside perspective that can deliver reform without prejudice.
I would prefer someone international with experience in other central banks. Like when the Bank of England poached Mark Carney from the Bank of Canada.
Replacing Lowe with another groupthink crony is the problem, not the solution.
