Why was RBA Governor Philip Lowe “sacked”? With Dr. Andrew Wilson

There were some significant changes regarding the RBA recently.

Philip Lowe’s term as Reserve Bank governor was not renewed which means he’s been effectively sacked as Reserve Bank governor's current Deputy Governor; Michele Bullock will become Governor starting 18 September.

Regular listeners would know that I record a weekly video with Dr. Andrew Wilson, and this is the audio of last week’s Property Insider video.

So, let's hear what Andrew Wilson has to say about the sacking of Dr. Phillip Lowe. Andrew will also be discussing some of his latest data and if you are keen to see the charts, I will leave a link in the show notes so you can see them.

Today Dr. Wilson,delves into the intricacies of housing markets, bank policies, and the effects of recent changes at the Reserve Bank. Topics discussed include data on property trends across capital cities, the impact of the Reserve Bank of New Zealand's macro-prudential policies on the housing market, the trend of no interest rate changes despite a weakened economy, and the potential implications of the post-COVID stimulus package on inflation.

The episode also evaluates the performance of housing markets in specific regions, discusses current market trends, and provides an outlook on the property market and its likely trajectory.

In today’s show we discuss…

●       Analysis of Reserve Bank Governor Philip Lowe's mistakes and lessons for Deputy Governor Michelle Bullock

o   There was a misplaced obsession with the housing markets

o   The RBA supported “experimental” macro prudential policies between 2015 and 2018 which led to the supply side challenges their property markets are currently experiencing as well as skyrocketing rents.

o   Interest rates were kept on hold in 2016 - 17 despite a weakening economy when many jobs were being lost as the RBA didn’t lower rates as it was still concerned about our housing market.

o   However, interest rates will slash in the second half of 2019.

o   Under Dr Lowe’s watch bank margins rose significantly with some suggesting they were gouging on the changing rates, even though this isn’t really under the RBA control.

o   Who can forget the post-COVID message “There will be no rate rises until 2024”, which led many homebuyers and investors to take on significant borrowings at artificially low interest rates.

o   Dr. Lowe has a poor record of delivering forecasts of house prices, wage growth, and our labor markets.

o   There have been a number of recent inconsistent policy determinations.

o   Critique of the Reserve Bank's consistent misses on house price forecasts and mysterious policy determinations

●       Dr Wilson gives an overview of the housing markets in the various sub regions of Sydney and Melbourne and Brisbane

●       We get a snapshot of the current winter market trends and auction results around Australia

●       We discuss the property market outlook and why house prices won't fall despite increased stock and slower rent growth

Links and Resources:

Michael Yardney

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Dr. Andrew Wilson, Chief Economist My Housing Market

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Some of our favorite quotes from the show:

“So under Michelle Bullock’s watch, inflation is going to come under control, interest rates are going to come under control and she'll probably be a little bit more popular.” – Michael Yardney

“Maybe agents are a little bit lazy in Brisbane because they're not used to the auction culture, and they can sell almost anything they list at the moment anyway.” – Michael Yardney

“So for most of us, morning is when your brain is charged and ready to make the tough decisions that require a lot of brain power.” – Michael Yardney

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