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Incoming RBA boss urged to ‘reset’ on rates, jobless

Newly appointed RBA boss Michele Bullock with Prime Minister Anthony Albanese.

Newly appointed RBA boss Michele Bullock with Prime Minister Anthony Albanese. Photo: AAP

Incoming RBA boss Michele Bullock is being urged to put an end to the spate of interest rate rises, as Australian families struggle to make financial ends meet.

Australian Council of Trade Unions secretary Sally McManus also wants a “reset” of the unemployment target following Friday’s announcement that Ms Bullock will take over from Philip Lowe in leading the Reserve Bank from September.

Ms McManus welcomed the “changing of the guard” at the central bank. But she urged Ms Bullock to consult with working families on interest rates.

“In the last 14 months we’ve seen 12 interest rate rises. That can’t go on,” Ms McManus said on Friday.

“Workers have been feeling the brunt of inflation rate rises, and we call on  Michele Bullock to take a different approach than her predecessor.”

Ms McManus also said the Reserve should engage with the union movement on employment.

“Economists have an idea of where they think unemployment needs to be to stop wages magically going up. During the pandemic and post pandemic, we have seen unemployment be very low and it was not causing wages to go up,” she told the ABC.

“In terms of what is full employment and … how low you can have unemployment before it has an impact on wages … that should be reset now because we have seen in real life what the evidence shows us.”

Ms Bullock angered unions with a speech in Sydney last month, when she said Australia’s jobless rate needed to be higher to get inflation under control.

“The unemployment rate will have to rise, the economy does have to slow,” she said.

“But we think that we can hopefully bring the inflation rate back down to that target band – might take a little bit longer – but we can preserve some of those gains for employment that we’ve achieved over the last few years. That, I think, is the key.”

Australian Council of Social Service chief executive Cassandra Goldie echoed Ms McManus on Friday.

“The critical question, of course, is what will happen now to the approach of the bank as a whole. We certainly believe we do need to see a reset from the traditional approach,” she told ABC TV.

“The worst thing that can happen to you when you’re facing a cost-of-living crisis is that you lose your job,” she said.

Govt announces Michele Bullock to take over RBA

Ms Goldie said ACOSS had cautioned the Reserve against more rate hikes.

“I don’t think that we’ve seen the rate rises that are already now locked in flow through; we haven’t seen the full effect of those yet,” she said.

Ms Bullock will become the RBA’s first woman leader when Dr Lowe’s seven-year tenure ends in September. She has been the bank’s deputy governor since April last year, after a near four-decade Reserve career.

She was one of three people on the government’s shortlist – the others were Treasury secretary Steven Kennedy and Finance secretary Jenny Wilkinson.

“It is a challenging time to be coming into this role but I will be supported by a strong executive team and boards,” Ms Bullock said in a statement on Friday.

Prime Minister Anthony Albanese said Ms Bullock was “eminently qualified” to lead the national institution.

“Michele will be in an important job at an important time with the challenges we face globally,” he said.

Dr Chalmers said Ms Bullock offered the best combination of experience and expertise along with a fresh leadership perspective.

“This is the right call but it’s not an easy call,” he said.

Shadow treasurer Angus Taylor welcomed Ms Bullock’s appointment.

“Dr Lowe has been an independent, distinguished, and dedicated governor who has helped to steer Australia through some of our biggest economic challenges,” he said.

“Families are feeling the impacts of higher prices and rising interest rates every day. Along with strong economic management, a strong Reserve Bank is essential to addressing the inflation that is driving higher prices.”

Opposition Leader Peter Dutton said earlier he did not want a senior public servant appointed to the role, arguing that the relationships between senior ministers and top bureaucrats was too cosy.

But Dr Chalmers lashed Mr Dutton as “relentlessly negative” and said he was “bagging things that aren’t even happening”.

Australian Industry Group chief executive Innes Willox said Ms Bullock was an “excellent choice” to lead the RBA during turbulent economic times.

“Maintaining stable, predictable and transparent monetary policy is a pillar of a vibrant modern market economy and the incoming governor will provide continuity at a precarious time for the global and domestic economy,” he said.

Ms Bullock will have to steer the central bank through a major reform era as well as the unfinished task of returning inflation to target.

Inflation was still growing at 5.6 per cent annually in May, well above the 2-3 per cent target range.

Former treasury official and economist Steven Hamilton said Ms Bullock was the best option but there was a valid argument to bring in an outsider to “shake things up” after the review findings.

He told ABC TV the decision to go with an insider, who could implement change but was unlikely to “scare the horses”, was right given the uncertain economic environment.

But Mr Hamilton said Dr Lowe should not be criticised for lifting interest rates to tackle high inflation, as the RBA has done since May last year.

Grattan Institute chief executive Danielle Wood was not surprised Dr Lowe’s term ended given the review findings.

“It would be very unfortunate, though, if it was in any way a reflection of very difficult decisions the bank has had to make over the past year,” she said.

Dr Chalmers and Dr Lowe are still expected to travel to India on Monday for a meeting of the G20 finance ministers and central banks.

-with AAP

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