The review examining the Reserve Bank of Australia will also influence the chances of its governor, Philip Lowe, serving a second term, according to Jim Chalmers.
The treasurer and the government have been careful not to criticise the RBA governor and have maintained that the independent review, ordered in July and due to report back in March, is not a “performance review”.
But asked about the possibility of Lowe being reappointed to a second term next year, after his tenure ends in September, Chalmers reserved his decision.
“We would ordinarily come to a view on that around the middle of next year,” he told ABC radio RN Breakfast. “I’d consult the prime minister and the cabinet in the usual way.
“And obviously the Reserve Bank review in March will be relevant to those considerations, will feed into our thinking – and not because we’ve asked for some kind of performance review of the governor but because we want to learn from best practice and give the RBA the best structures and institutional settings we can for the decisions that they’ll make into the future.”
Chalmers said the review would “obviously guide the kind of Reserve Bank that we want and the personnel and the leadership of the bank … will feed into those kinds of considerations” but he stopped short of saying it would dictate any decision.
“You asked me when we might come to a view on that and the normal course of events would be around the middle of the year, in consultation with my colleagues,” he said.
“But we do have this really important review being handed to me in March and responded to at some point. After that it would be strange, I think, not to factor in some of those conclusions.”
The expert panel leading the review has been asked to examine everything from the bank’s monetary policy arrangements to its governance and leadership, including accountability arrangements.
Lowe and the bank have faced criticism, particularly from the Greens’ Treasury spokesperson, Nick McKim, for predicting in 2021 there would be no interest rate rises until at least 2024. On Wednesday the bank announced its eighth interest rate increase in a row, with the overnight cash rate rising from 0.1% in May to 3.1% in December in an attempt to tackle rising inflation.
Lowe has apologised to people who may have made financial decisions based on the 2024 prediction “and now find themselves in a position they don’t want to be in”.
His original statements included caveats about economic conditions and came before global inflation became an undeniable issue but Lowe was also the only central bank figure to include a date with the prediction.
Lowe and the bank have warned it expects to raise interest rates further, responding to inflation and the labour market.
