Weekly Update: 14th July 2023

“The ABA acknowledges RBA Governor Philip Lowe’s leadership… Ms Bullock takes on this important role as the RBA continues to address the nation’s inflation challenge and enters a period of change in implementing the recommendations from the Governments Review of the Reserve Bank of Australia.” 

– ABA Deputy CEO Vanessa Beggs

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Feature:

• Michele Bullock has been appointed as the next Governor of the Reserve Bank of Australia (RBA) and will commence her term upon the retirement of Philip Lowe in September.
• Ms Bullock’s appointment makes her the first woman to lead Australia’s central bank.
• Ms Bullock brings a wealth of experience to the role of Governor, having joined the RBA in 1985 as an analyst and later being appointed as Assistant Governor in 2010, and Deputy Governor in 2022.
• Treasurer Jim Chalmers noted that “Michele is an outstanding economist, but also an accomplished and respected leader.” The Prime Minister and Treasurer also thanked Dr Lowe for his service over the last 40 years.
• ABA Deputy CEO Vanessa Beggs welcomed the appointment:
  • “The ABA welcomes the appointment of Michele Bullock as the new Reserve Bank of Australia (RBA) Governor.
  • “The ABA acknowledges RBA Governor Philip Lowe’s leadership of the central bank during one of Australia’s most turbulent periods, the COVID-19 pandemic. 
  • “We wish Governor Lowe the best for the future. Ms Bullock takes on this important role as the RBA continues to address the nation’s inflation challenge and enters a period of change in implementing the recommendations from the Governments Review of the Reserve Bank of Australia.”

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Parliamentary Update:

• The House of Representatives Economics Committee held public hearings with the four major banks on 12-13 July.
  • Topics explored by the Committee included scams, interest rate decisions, cost of funding for banks, insurance coverage of home owners, and the economic outlook.
• Prime Minister Anthony Albanese visited Germany and Lithuania. The PM announced that Australia is joining the “climate club” which is backed by the Group of Seven major economies to take more ambitious action in tackling global warming.

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Policy Update:

• ABA represented the banking industry at a meeting with ARNECC on its recently released plans for Interoperability today.
• ABA attended a McKell Institute event on Tuesday where the RBA Governor addressed a small group of attendees.
• ABA partnered with Microsoft to run a member education workshop on the possible implications of AI technology on the banking sector. Over 50 staff from ABA member banks participated.

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Regulatory Update:

• Speaking at the Economic Society of Australia’s annual conference, RBA Governor Philip Lowe announced changes that would be made to the RBA as a result of the recent independent review into the RBA. These include:
  • Longer board meetings occurring less frequently (eight times a year) with cash rate decisions attributed to the whole Board, alongside greater engagement with staff before cash rate decisions are made.
  • More frequent communication, including the Governor to hold a press conference after each cash rate decision and the Statement on Monetary Policy being released at the same time as that quarter’s cash rate decision.
  • The Board to have a stronger role in setting the research agenda and being signatory to the Statement on the Conduct of Monetary Policy.
  • Continuing to incorporate climate more deeply into analysis and five yearly reviews by Treasury on the monetary policy framework.
• The ACCC published an issues paper on digital platforms and data brokers and is also seeking views on the data broking industry, with an emphasis on any competition or consumer issues arising from the industry.
• Deputy Chair of ASIC, Karen Chester, wrote an article for the Australian Institute of Company Directors supporting a mandatory climate change-related disclosure regime in Australia based on the global baseline being developed by the International Sustainability Standards Board (ISSB). 

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Economic Update:

The rate of growth of household spending has continued to decline, with growth of 3.3 per cent in May 2023 compared with May 2022, down from a recent peak of 28.8 per cent growth in September 2022, Figure 1. Yearly and monthly growth has been driven by spending on non-discretionary services (Figures 2 & 3).

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Communications and Media:

• There were a series of media reports this week on the issue of scams, particularly in relation to the UK’s customer reimbursement model. The ABA provided ongoing commentary to the media, focusing on the importance of disrupting scams before they take place and emphasising the importance of an ‘ecosystem’ approach to help stop scams with banks, government, law enforcement, telcos, social media, crypto platforms and individuals all having a crucial role to play in beating the scammers.

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Upcoming Events:

• The Australian Banking Association (ABA) in partnership with Chartered Accountants ANZ and Deloitte hope that you are able to join the upcoming face to face Climate & Sustainability Event to be held jointly at the Deloitte offices in Sydney and Melbourne on Friday 28 July 2023.
• To register, please click here
• This event is targeted towards our member banks senior professionals.

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Upcoming Submissions:

Published submissions

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Selected Media:

• ABC – Reserve Bank governor Philip Lowe announces big changes to RBA board
• AFR – Lowe’s ten point plan for better RBA decisions
• AFR – Rates pause gives no respite from shopping gloom
• SMH – Westpac’s Bill Evans warns central banks risk raising rates too far
• The Australian – What does RBA appointment mean for rates outlook?

Weekly Update