The Reserve Bank governor, Philip Lowe, has the reassuring demeanour of a Victorian-era country parson. Australians saw this quality during the opening months of the coronavirus pandemic when he was communicating with the public reasonably regularly on television.
Lowe’s public projection during those opening months of freefall was calm and considered, purposeful and reassuring. So it was interesting on Wednesday to hear a more candid reflection about what he went through in 2020.
The RBA governor told a Senate estimates hearing that health officials back then were warning tens of thousands of Australians would be “dead within months”. He was aware of preparations for temporary morgues in cities, including one proximate to the central bank’s premises in Martin Place. The key decision-makers believed vaccines wouldn’t turn up for three years.
“It was really, really, terrible and scary,” Lowe said.
The point of teasing this out is simple.
Lowe has good game face.
If this bloke is having a meltdown, or harbours any crippling moments of self doubt, he won’t be sharing that with a bunch of politicians lining up on a Wednesday morning for a scratch show trial in a Senate committee room.
Lowe occupies a position where his utterances and unconscious eyebrow inflections move markets. So the response to all external stimuli is resting country parson face, whether the incoming is existential (temporary morgues), or prosaically vexatious (opposition senators trying to coach him to say Jim Chalmers is a fiscal vandal; a Green senator declaring he should consider his position; a One Nation senator spruiking “the iron boomerang” while fulminating against the bank for increasing the money supply; or a chaotic riff from Gerard Rennick on asset stripping, jawboning and 10-year bond yields.)
The only hint of pressure or transient discomfort is an almost imperceptible tightening of the smile and an upward lilt in the governor’s voice.
One more point about Lowe’s persistent retro quality. This is a central bank governor who came of age professionally in more orderly times.
Lowe clearly remembers a world when plump retail bank profits were considered (and routinely remarked upon) as a critical marker of Australia’s strong financial services sector rather than a signifier of unchecked corporate greed. He remembers a time when an earnest review by the productivity commission would lead an orderly national conversation about “growing the pie” for many weeks, rather than surface momentarily before being hacked to death within hours.
Lowe is from an era where the elites held all the microphones and communicated to one another on the opinion page of the Australian Financial Review; where the shibboleths of national economic life were proclaimed to communities who lacked the opportunity or the mass platforms to talk back.
The RBA governor referenced that orderly pre-internet, pre-social media world in passing during his evidence on Wednesday – perhaps a touch wistfully, if you were inclined to be sentimental, perhaps a touch elegiacally – but without any obvious expression or mode of self-pity.
Things are measurably different now.
Lowe acknowledged the world he inhabited as RBA governor in 2023 was “noisy”.
Lowe said noisy, but I suspect he meant “contested”. Politicians and their amplifiers (and the interest groups that orbit around that ecosystem) once tiptoed around the central bank. Now, everything is contested.
Quizzed at one point about whether he should have been briefing traders from major banks at a private function just a couple of days before the latest interest rate rise – an outing outed in the financial press – Lowe observed he couldn’t live in a “bubble”. Central bank governors network, he said, and there was nothing “untoward” about that. Those exchanges were essential. This makes perfect sense as a point of logic, but Lowe’s patient explanation of his non-public facing rituals read like another vignette from a vanishing world. A world where powerful people were permitted to caucus more or less freely among themselves because the cultural default was their judgments were beyond reproach; a closed shop where everybody knew the rules and didn’t gossip or otherwise transgress.
So this quality of other-worldliness, of cloister, of whimsy, persisted, both presentationally and substantively on Wednesday.
But balancing that were moments of steel.
Lowe has just presided over nine increases to the official cash rate. He is well aware there is now a rolling seminar about his fitness to lead the central bank. Nothing about that experience is pleasant, but his scope for self-indulgence is nil. Given risks abounded, the governor came armed with messages he wanted to convey, and an inclination to avoid all trapdoors.
The first message was he wasn’t the only ogre. Interest rates decisions were made by the RBA board, not just the governor. Personal criticism did come with the territory, but was “a bit unfair” when “there are nine of us” making decisions.
The second was the “noise” is not influencing the bank’s decisions. Lowe said he was aware of the provision in the Reserve Bank Act that says the treasurer can override bank policy, but it has never been used and it would be a “retrograde step” for any government to go there (just in case anyone might be thinking about it). Implicitly: I may not be reappointed, but I know what I’m doing, and I’m going nowhere until someone puts my pot plant in a moving box.
The third was things have become lively in part because people haven’t experienced proper inflation for thirty years. Australians have forgotten that central banks hike rates because inflation is “corrosive for the economy” – not because we are Martin Place fat cats who have no idea what it’s like to have a whopping mortgage.
The fourth was more interest rate rises are coming. “I don’t think we’re at the peak yet but how far they need to go, we’re still unsure,” Lowe said at one point. Which means that “noise” has no chance of subsiding any time soon.