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Treasurer: Decision on RBA board to come mid-2023

The make-up of the bank and the governor’s tenure will be decided after the government receives its review, Jim Chalmers has said.

user iconJosh Needs and Jerome Doraisamy 13 December 2022 Politics
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A decision on the structure and personnel of the Reserve Bank of Australia (RBA) board will come in mid-2023, Treasurer Jim Chalmers said, as speculation about the governor’s tenure intensifies.

Dr Chalmers confirmed Philip Lowe’s current term was due to end next September, and a decision regarding his position is to be influenced by the review of the RBA.

“(We’ll) factor in some of those conclusions in whatever we decide about the role of the governor,” Dr Chalmers told ABC’s RN Breakfast.

 
 

“We would ordinarily come to a view on that around the middle of next year; 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, and will feed into our thinking.”

The comments follow last week's interest rate rise - the eighth consecutive rise for the year - by 25 basis points to 3.1 per cent.

However, the treasurer was quick to say that while the government would use the review in its decision, it was not specifically about the governor’s role but the entire Reserve Bank system.

“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,” said Dr Chalmers.

“In the normal course of events when a big appointment like this is up in September of any year, you’d be thinking about consulting and concluding a view around the middle of the year; that’s not unusual that we would do that.”

“And because we’ve got this really detailed RBA review underway, of course, the convulsions they hand to me in March, which we’ll respond to at some point in the first half of next year, would be relevant to all of that.”

He confirmed that the results of the review would provide further insights into how the board has functioned and how the government wants the RBA to operate.

“There’s been a lot of interest in the composition of the board, the relevant expertise at the bank, or the inflation targeting regime, how they balance the various objectives of employment, the inflation target and all the rest of it,” said Dr Chalmers.

“So it’s been a really worthwhile process.”

He said all information would be considered; otherwise, the government would be doing a disservice.

“You asked me when his term would ordinarily be up, it’s September; you asked me when we might come to a view on that, and the normal course events would be around the middle of the year in consultation with my colleagues,” said Dr Chalmers.

“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 in whatever we decided about the role of governor.”

Following last week's rate rise, Lawyers Weekly spoke with Legal Home Loans (LHL) director of sales Cullen Haynes about how lawyers can respond to the latest rate rise.

Mr Haynes then appeared on an episode of The Lawyers Weekly Show, with LHL legal lending specialist Josh Jaramillo, to discuss the year that was with rate rises and how lawyers can prepare for 2023.