On December 5th of 2023 it was reported that Michele Bullock, the Governor of the Reserve Bank of Australia (RBA), was able to pay off the mortgage of her Sydney home in under 10 years. This was achieved via a half-price mortgage deal given to employees of the RBA.
The Five Dock home was purchased in April of 1991 by Ms. Bullock and her husband for $285,000 when interest rates were at 14% and falling. Under the now discontinued RBA loan scheme, the Bullock’s interest rate would have been halved to only 7%.
They were then able to pay off the property by 2000. The property is now estimated to be worth almost $3 million. John Rolfe for The Daily Telegraph detailed that Ms. Bullock had borrowed to purchase at least two of her three investment properties, all valued at over $1 million.
The revelations have emerged at the same time as Ms. Bullock and the central bank board meet to decide whether or not to impose the 14th rate rise in the past 20 months, which has grown from 0.1% to 4.35%. The most recent data from the Australian Bureau of Statistics indicates that inflation had fallen to under 5% as of last week, a more significant improvement than expected.
In November Ms. Bullock spoke to a conference of banking experts in Hong Kong where she stated that Australian mortgage holders were still “doing fine” and are “actually in a pretty good position.” The Governor also commented that the past year and a half of rate rises had “created a lot of political noise and a lot of noise from the general public.”
Ms. Bullock went on to assert that inflation was driven by domestic demand and underpinned by services:
“Hairdressers and dentists, dining out, sporting and other recreational activities – the prices of all these services are rising strongly… This reflects domestic economic conditions and is an indication that aggregate demand is sufficiently greater than aggregate supply to sustain these price increases.”
Chief Economist for Macro Business and former economic policy analyst for the Australian Treasury, Leith van Onselen, rejected Ms. Bullock’s notion that “haircuts and fillings” were to blame:
“She’s deliberately not picking the right targets… The strong demand is because the federal government is pumping record numbers of people into the country... She should be saying to the federal government, ‘bloody slow immigration’.”
Sky News host Chris Kenny called on Ms. Bullock to “get a grip” and get in touch with the average Australian:
“Bullock ought to get back from Hong Kong and head into the suburbs and regions so she can get a feel for how inflation and interest rates are really biting.”
Governor of the Reserve Bank of Australia
On Friday the 14th of July 2023 the Reserve Bank of Australia (RBA) announced Ms. Bullock as the replacement for Governor of the RBA, taking over from Philip Lowe who is retiring after 7 years in the role. Ms. Bullock started her new role on the 18th of September 2023. Mr. Lowe stated that the RBA would be in "very good hands" under Ms. Bullock's direction. In a statement Ms. Bullock said that she was "deeply honoured" to be appointed to such a position.
While it remains to be seen how the RBA will manage the cash rate into the future under Ms. Bullock's tenure, earlier statements suggest she will not be adjusting the RBA's current policy. Speaking to the Australia Industry Group, Ms. Bullock stated that the RBA's aim was to return inflation back to 2 to 3 percent by mid-2025 and that interest rates were their only mechanism of addressing inflation:
“As interest rates rise, people are incentivised to save more rather than consume, and that reduces demand...It also keeps the exchange rate a bit higher, which means that imported inflation is lower...It is our only tool; it works through a number of different mechanisms...But, really, in bringing down inflation, that’s the only tool we have.”
Who is Michele Bullock?
Ms. Bullock began her career in the RBA in 1985 and has held a number of senior positions, including becoming Assistant Governor in 2010 and serving as Deputy Governor since 2022. Ms. Bullock holds a Bachelor of Economics (Hons) from the University of New England and a Master of Economics from the London School of Economics. Ms. Bullock is also the first woman to be appointed governor of the RBA.
On the same day of the announcement of Ms. Bullock's appointment, Samantha Maiden for News.com published an article detailing Ms. Bullock's assets, stating that Ms. Bullock is "coming into the job with a multimillion-dollar property portfolio." The article described Ms. Bullock as a "Sydney landlord" who has "amassed a $6 million property portfolio." According to the official RBA declaration of material assets, Ms. Bullocks owns four properties, including a three-bedroom house in Sydney alongside her partner.
Sources & Further Reading
https://www.afr.com/politics/federal/michele-bullock-to-replace-lowe-as-rba-governor-20230714-p5do6w
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https://www.abc.net.au/news/2023-07-14/is-michele-bullock-the-right-choice-as-rba-governor/102602314