Philip Lowe is making a gentle first step in the private sector with philanthropy-focused LIC, Future Generation Australia; the former governor says the RBA has its messaging on rates right.
Already a subscriber?Former Reserve Bank governor Philip Lowe’s bone-dry sense of humour was on full display on Tuesday as he was He’d been introduced to the philanthropy-focused LIC about six years ago at a boardroom lunch with Future Generation founder Geoff Wilson and his team.
“Fortunately, unlike the Barrenjoey lunch, it didn’t leak to the press,” Lowe jokes, referencing his brush with controversy last year,Lowe says he’s missing the “friendships and fellowships” he built during his 42 years at the RBA, and acknowledges he keeps an eye on the economic data on which his successor, Michele Bullock, will make her next interest rate calls. But he’s enjoyed taking three shots off his golf handicap and spending time with his family. And he’s happily moved on from the intense scrutiny he faced late in his tenure.“I don’t miss being in the public eye, with people at my front gate with TV cameras, taking pictures of me and my family.”But when asked to reflect on comments at The Australian Financial Review Business Summit on Tuesday fromwho suggested central banks might do well to keep rates higher for longer in the face of persistent inflation, Lowe noted that Bullock had pointed to a two-way risk on interest rates. That is, they could rise or fall, depending on the data. “The bank was right to remind us that there’s still a risk on interest rates in Australia,” Lowe says. “Even though markets are pricing cuts there’s still a risk.”As chairman, he’s not expecting to be giving the fund managers macroeconomic advice. But he will work with the LIC’s investment committee, and he will clearly have a very good sense of where the economy is going next.With several global equity markets trading near all-time highs, it can seem as though investors are hanging on every utterance from central bankers more than usual at present. But Lowe doesn’t see it that way. “Right through my time on the RBA board for 10 years, the markets seem to be hanging on every word that we said – and sometimes what we didn’t say. It’s a constant fact of life.” Lowe’s first step into the private sector is a relatively gentle one; the $476 million LIC is hardly Macquarie Group, where Lowe’s predecessor, Glenn Stevens is chairman. But at the same time, it’s a very Lowe job. Future Generation has 18 fund managers running money on behalf of investors on a pro bono basis, and donates 1 per cent of its asset base to youth charities each year. Lowe says the role brings together two of his big passions in life: finance and helping children. “I’ve worked there for 42 years and the RBA’s core rationale was to improve the economic welfare of the Australian people. That’s a really important mandate. And now I’m joining an organisation which is continuing that work and will help improve the welfare of Australian kids. What can be more important than that?” is senior Chanticleer columnist based in Melbourne. He was the Companies editor and editor of BRW Magazine.