Instant View: Australia appoints first female head for RBA

SINGAPORE (Reuters) – Australia on Friday appointed Michele Bullock as the next central bank governor, replacing Philip Lowe to become the first female head of the key institution.

Reserve Bank of Australia (RBA) Governor Lowe’s (NYSE:) current seven-year term is due to finish on Sept. 17, which will now mark the end of his 43-year career at the bank.

The government has been under pressure to dump Lowe for encouraging people to borrow in 2021 when he said interest rates were unlikely to rise until 2024, only to start hiking rates two years early in mid-2022.

COMMENTS:

RODRIGO CATRIL, SENIOR FX STRATEGIST, NAB, SYDNEY

“It’s continuity, and in that regard continuity probably means a cautious approach to further hikes from here is likely.

“The question mark is adoption of the recommendations from the review, which included the idea of targeting the middle of the (inflation) band, rather than just the top.

“It remains to be seen how she would interpret that. But not having an external appointment – clearly it plays to the view that only a gradual change can be expected.”

CAROL KONG, CURRENCY STRATEGIST, COMMONWEALTH BANK OF AUSTRALIA, SYDNEY

“The markets took the RBA announcement in their stride, with the dollar little changed. The markets don’t expect Michele Bullock to materially change the path of future RBA interest rates from here. She has already got a lot of experience of how the RBA operates and that continuity means little change in terms of the RBA policy outlook.

“We still expect one more rate hikes from the RBA in August, although that will be highly dependent on the evolution of economic data.”

TONY SYCAMORE, MARKET ANALYST AT IG GROUP, SYDNEY

“She’s a sensible choice. She’s got really good credentials. And if you look at how the market has reacted post the announcement, the Aussie dollar has barely moved. That suggests to me that the market is very comfortable with her appointment.

“Steady as she goes in terms of getting inflation back to target. She’ll ensure that continues in a sensible manner. And she doesn’t have the baggage which has probably unfortunately tarnished the Philip Lowe legacy.”

JONATHAN KEARNS, CHIEF ECONOMIST AT CHALLENGER, SYDNEY

“Michele is an outstanding candidate. She is very well qualified. She has experience across the whole gamut of responsibilities of the Reserve Bank. I think that would be very helpful. There has been a lot of change at the RBA… a lot of turnover of senior staff, and so Michele does provide a degree of continuity.

“I wouldn’t expect there to be (much market reaction), because Michele is certainly a very highly regarded candidate. I have no doubt that market participants would have confidence that Michele will continue to implement thoughtful policy to bring inflation down.”

HUGH DIVE, CHIEF INVESTMENT OFFICER, ATLAS FUNDS MANAGEMENT, SYDNEY

“She was an expected candidate. My interpretation is this is much better than a political appointee. Markets would have been concerned if it was someone very overtly political. So it’s probably the best outcome.

“The policy outlook is relatively the same. A little bit more tightening and wait and see if they can get inflation under control. You can see the market hasn’t reacted.”

ROB THOMPSON, RATES STRATEGIST, RBC CAPITAL MARKETS, SYDNEY

“This is the status quo. She seems pretty in line, as much as we can tell, with Lowe’s published and public views. Whereas Kennedy might have been perceived as a bit dovish, Wilkinson more of a question mark, with Bullock we don’t really see any market implications directly unless of course she strikes a slightly different tone in her communications to come.

“We’ve got to give an allowance for getting settled in and see if she does sound a bit different, but looking back the last little while we don’t really see any reasons for a market reaction at the moment. And we haven’t seen one today.”

DIANA MOUSINA, DEPUTY CHIEF ECONOMIST, AMP (OTC:), SYDNEY

“It’s a good decision because there needs to be that continuity from Philip Lowe and she is the continuity plan.

“Some of the speeches from Bullock have been a bit more dovish on interest rates, but I think it’s pretty marginal. In terms of monetary policy, it has the least implications compared to the other non-Reserve Bank candidates.”

MATT SIMPSON, SENIOR MARKET ANALYST, CITY INDEX, BRISBANE

“Having worked at the RBA for nearly four decades, nobody can say Bullock lacks experience. But will she bring a radical new line of thinking, or will it be a revised version of the old guard? The lack of reaction from AUD would suggest the latter. ”