Michele Bullock beat other candidates to become Australia’s first female central bank governor in part because of her communications skills. They’re set to be tested as the Reserve Bank embarks on its biggest overhaul in decades.
As she takes over Monday, Bullock is counted on to shore up the RBA’s credibility which hit a low point with predecessor Philip Lowe restating in late 2021 his forward guidance that interest rates were unlikely to rise before 2024. Instead, they started increasing in May 2022, setting off the central bank’s most aggressive tightening campaign in more than 30 years.
The onus is on Bullock to course correct after communications mishaps during Lowe’s term while ensuring that multiple speakers coming forward are aligned in their messaging. One factor in Bullock’s favor is that she’s unlikely to need to raise the cash rate much further, if at all, from the current 4.1%, meaning there will probably be less scrutiny on the RBA while she’s reorganizing how it operates.
Australia’s public debate on monetary policy is often characterized by “vitriol, personal attacks and clickbait,” Lowe said in his final speech as governor. The RBA’s latest forecasts show inflation will only return within the 2%-3% target in late 2025. And while price pressures in Australia are easing faster than anticipated, it’s too soon to declare victory. US data last week showed stronger-than-expected price pressures, cementing the case for further Fed tightening.
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