Treasurer Jim Chalmers has hit back at rumours of tension between him and the outgoing Reserve Bank governor Philip Lowe as the pair travel to India on Sunday.
Dr Chalmers announced on Friday that Dr Lowe will not be reappointed to his position – with public anger over 12 rate rises since May 2022 having sealed his fate.
Instead, when his term ends in September, he will be replaced by his current deputy, Michele Bullock, who will become the first female Reserve Bank governor.
But the Treasurer and Dr Lowe are travelling to India on Sunday for a meeting of global finance ministers – a trip many think will now be very tense.
But speaking on ABC’s Insiders program, Dr Chalmers said he had ‘a mountain of respect for Philip Lowe. I mean it. I’ve worked closely with him … for a long time.’
Federal Treasurer Jim Chalmers (pictured with his wife Laura) has hit out at rumours of there being an ‘awkward’ tension between him and the outgoing Reserve Bank governor Philip Lowe
The Treasurer said he had no fears the trip would now be awkward and that Dr Lowe ‘has carried himself with characteristic dignity and professionalism throughout.
‘Including, by the way, saying that Michele Bullock’s appointment was a first-rate appointment,’ he said.
Dr Chalmers said Dr Lowe had the respect and gratitude of the government for his work and praised the governor’s reaction to the news.
‘He is behaving in an impeccable, dignified way,’ he said. ‘We work really well together … We are professionals.
‘I have a high regard for him and he’s highly regarded internationally.
‘We chose Michelle Bullock, to take the bank forward but that in no way diminishes the dedication of Philip Lowe.’
Insiders host David Speers questioned if Dr Chalmers respected Dr Lowe’s interest rate decisions – after he raised them 12 times in the last 13 months.
The cash rate was left on hold at an 11-year high of 4.1 per cent, following the July board meeting during the school holidays.
The decision marked only the second monthly pause since April, with interest rates since May 2022 surging at the most aggressive pace since 1989.
‘People under pressure want to understand why these decisions are being taken,’ Mr Chalmers said.
‘I know that my responsibility is to explain and sometimes defend the decisions I take in the context of the government’s economic plan and the budgets I hand down.’
Reserve Bank governor Philip Lowe (pictured) is travelling to India, along with Treasurer Jim Chalmers, on Sunday for an economic summit
The Reserve Bank has paused the rate hikes for only the second time this year but the relief is likely to be short-lived
Speers interrupted to suggest the Treasurer was not defending the Reserve Bank.
‘The Reserve Bank has an important role to explain the decisions they take,’ Dr Chalmers said.
‘I don’t think that’s an especially controversial point.’
Dr Lowe is the first RBA governor in almost 30 years not to have the initial seven-year tenure extended by three years.
As the Reserve head, he has faced heavy scrutiny in the past year, particularly from homeowners who have been hit with 12 interest rate hikes since May 2022.
Those rises came after Dr Lowe infamously promised that interest rates would not rise until at least 2024.
Both of his predecessors, Glenn Stevens and Ian Macfarlane, had their terms extended to 10 years.
Ms Bullock, who will become the ninth governor of the RBA, will start her seven-year term on September 18.
Dr Chalmers said the decision not to extend Dr Lowe’s term ‘is more about the future than the recent past.
‘Michele Bullock, I think, as the outgoing governor has said, is a first-rate appointment.’
Prime Minister Anthony Albanese (left) is pictured with the incoming Reserve Bank governor Michelle Bullock (centre) and Treasurer Jim Chalmers (right)
