Philip Lowe traveled to India with treasurer Jim Chalmers days after losing his million-dollar job leading the Reserve Bank.
The pair were spotted in Gandhinagar where they traveled for the G20 gathering of finance ministers and central bank governors from around the world.
On the surface, they are both seen smiling, holding orange plastic cups, presumably with coffee, after traveling more than 10,000 kilometers from home.
Both wore striped ties which appeared to reflect the colors of their respective state teams, Queensland’s Dr Chalmers, wearing maroon and Dr Lowe, wearing blue.
The only sign of excitement was seen as Dr. Low walked with his left hand in his pocket, talking to Dr. Chalmers, who had a big smile.
Philip Lowe traveled to India with Treasurer Jim Chalmers days after losing his job as head of the Reserve Bank
They arrived in the Indian state of Gujarat on Monday night Australian time, just three days after Dr Chalmers announced Dr Low’s seven-year term at the helm of the RBA would not be extended beyond September 17.
With just two months left as Australia’s most powerful central banker, Dr Low used his last opportunity on the international stage to warn that weak productivity growth will feed inflation, as companies pass on higher costs to consumers.
“I agree with the immediate outcome and the immediate challenge is to bring down inflation,” he told other central bankers in India at a two-day summit.
‘We really have to be successful there but I think the biggest challenge is increasing productivity.’
Without productivity improvements, high inflation means wage increases are meaningless.
‘So we condemn our citizens to lower real wages, smaller public services and increased tensions in the distribution of income,’ Dr Low said.
They arrived in the Indian state of Gujarat on Monday night Australian time, just three days after Dr Chalmers announced Dr Low’s seven-year term at the helm of the RBA would not be extended beyond 17 September.
Minutes of the Reserve Bank’s July meeting, which kept the cash rate at an 11-year high of 4.1 percent, were released on Tuesday, warning of further rate hikes.
‘Members agreed that some further tightening of monetary policy may be needed to bring inflation back to target within a reasonable timeframe, but this depends on how the economy and inflation evolve,’ it said.
But for the first time since the tightening cycle began in May 2022, Reserve Bank minutes revealed that board members were concerned about unemployment rising too high, with the unemployment rate likely to reach 4.5 percent by the end of 2024, up from 3.6 percent now.
‘Higher interest rates can be expected to encourage households to save more, which will affect consumption,’ it says.
‘If that were to happen, labor demand would slow and the unemployment rate could rise beyond the rate necessary to ensure a return to target inflation over a reasonable period of time.’
Inflation eased back to 5.6 percent in May, down from an annual pace of 6.8 percent in April, but still above the RBA’s 2 to 3 percent target.
With just two months left as Australia’s most powerful central banker, Philip Lowe used his last opportunity on the international stage to warn weak productivity growth would feed inflation.
Dr Lowe’s deputy for the past 13 months, Michelle Bullock, will become the first woman to lead the Reserve Bank of Australia since its inception in 1960 on 18 September.
The outgoing governor, who will no longer have a job with a pay package of $1,037,709, presided over 12 interest rate hikes in 13 months, marking the most aggressive pace of monetary policy tightening in 34 years.
The 61-year-old economist joined the Reserve Bank in 1980 doing clerical work while studying for a Bachelor of Commerce degree at the University of New South Wales, moving to Sydney from regional Wagga Wagga.
Dr Chalmers, the man who decided his fate as RBA governor, was just two years old when Dr Low began his 43-year career with the central bank.
Dr Lowy is the first RBA governor not to have his term extended beyond seven years since 1996, when new Liberal treasurer Peter Costello refused to keep Bernie Fraser.