RBA’s Lowe makes final rates call: What happens next?

The departing governor of the Reserve Bank of Australia, Philip Lowe, was snapped alongside his successor, Michele Bullock. (Image source: Getty)

The Reserve Bank of Australia (RBA) is about to experience a significant transformation as Philip Lowe, the departing governor, makes his last decision on interest rates today.

The present vice-governor, Michele Bullock, who was declared as Lowe's replacement in July, will assume the leading position starting on September 18th.

Here's the essential information you should be aware of regarding the modifications made by the RBA.

Additionally, you may want to check out: The specific date predicted by CBA for when RBA will decrease interest rates.

Additionally, take a glance at: RBA's bleak projection for the Australian economy

Additionally, check out: RBA asserts that elevated interest rates are 'not the issue'.

Why Replace Philip Lowe?

Philip Lowe's tenure as governor of the Reserve Bank of Australia will come to an end on September 17th after a commendable seven-year stint.

The treasurer is responsible for selecting RBA governors, who can serve for a maximum of seven years. However, there is no restriction on the number of terms they can fulfill. The last two governors had their mandates prolonged by three years.

Lowe has received severe backlash from the public and relentless demands for his stepping down regarding the RBA board's choice to significantly increase interest rates in order to control inflation.

Lowe had previously mentioned that the interest rates would remain stable until 2024. However, he later expressed regret to those individuals who had obtained mortgages based on his remarks and presently find themselves in an undesirable situation.

In a span of slightly more than a year, the interest rate has experienced a significant increase from an historically low level of 0.1 percent to 4.1 percent. Consequently, individuals who have borrowed $500,000 with a repayment period of 30 years have to allocate an additional $1,217 each month to meet their mortgage obligations due to these rate hikes.

Who Is Michele Bullock?

Michele Bullock is set to assume the role of the ninth governor of the RBA on September 18. This will mark a significant milestone as she will be the first woman ever to hold this esteemed position in the central bank's lengthy existence of 63 years.

Bullock became a part of the RBA in 1985 as an examiner and has occupied several high-ranking roles within the institution, progressing to the position of associate governor in 2010 and assuming the role of vice-governor in April of the previous year.

According to Treasurer Jim Chalmers, Bullock's selection achieves the ideal equilibrium by combining remarkable skills and knowledge with a new and innovative outlook on leadership.

Upcoming RBA Changes: What's Next?

Starting in 2024, the governing body of RBA will convene on a total of eight occasions throughout the year, as opposed to the existing frequency of 11 meetings, to determine interest rates.

Four of these meetings will take place on the initial Tuesday of February, May, August, and November. The rest of the meetings will be convened in the middle of those months, specifically on March 19, June 18, September 24, and December 10.

The gatherings will have a longer duration, usually commencing in the afternoon of Monday and then progressing into the morning of Tuesday, with the announcement of the decision on interest rates to occur at 2:30pm on Tuesday afternoon.

The governor of the RBA will also conduct a media briefing at 3:30pm subsequent to each board meeting, elucidating the verdict on interest rates to the general public.

These are a few notable alterations to the RBA, which were part of 51 suggestions following the RBA Review.

Bullock will be in charge of supervising the execution of the suggestions.

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