Philip Lowe backs RBA’s caution on rate cuts – MASHAHER

Former Reserve Bank governor Philip Lowe has joined the chorus of voices warning that stubborn inflation could lead to interest rates staying higher for longer than many expect.

Speaking after his appointment as the next chair of philanthropic fund manager Future Generation Australia, Lowe echoed the cautious outlook on rate cuts from JPMorgan boss Jamie Dimon, who said borrowing costs in the US may need to stay high in the near term to keep inflation at bay.

“We’ve got to make sure that inflation is actually sustainably back to target, and we’re not there yet,” Lowe said at a press conference on Tuesday in Sydney.

Lowe said he wasn’t going to offer advice to his successor Michele Bullock, but clearly saw his views as aligning with the caution shown by the RBA under her watch.

“The Reserve Bank, in its last commentary, reminded us that there was still two-way risk on interest rates and said it’s possible rates go up again … even though markets (are) pricing cuts,” he said.

Lowe, who left the RBA last year after seven years at the helm of the central bank, has joined the board of fund manager Future Generation Australia as an independent director, and will become its chairman in May. Former NSW premier Mike Baird, who has been the chairman since 2022, will remain on the board, but step down from the chair to focus on his chairman role at Cricket Australia.

“I’ve had a relatively short time as chair, but it’s something that I’ve very determinately wanted to stay connected to,” Baird said. “When I was asked to play a role at Cricket Australia as the chair, I knew that commitments would be challenging, but I was determined to stay involved.”

Future Generation, which was founded by finance veteran Geoff Wilson, gives investors access to portfolios managed by a group of fund managers who are working pro bono and sacrifice any management fees – amounting to 1 per cent of its funds under management – to charities.