Treasurer Jim Chalmers has declined to back the Reserve Bank of Australia's last interest rate decision, while flagging unemployment may need to rise to rein in inflation.
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Dr Chalmers on Friday announced RBA Deputy Governor Michele Bullock will replace incumbent governor Philip Lowe when his term ends in September.
Asked if the decision not to extend Dr Lowe's term was due to his handling of interest rates, Dr Chalmers said he wanted an appointment to take the bank forward into the future.
"I have a mountain of respect for Phil Lowe," he told the ABC's Insiders program on Sunday.
"I've known him for a long time he has carried himself with characteristic dignity and professionalism throughout."
Asked if he respected the central bank's last rate decision - which was to leave the key cash interest rate at 4.10 per cent in July after hiking in June - Dr Chalmers deflected the question.
"People who are under pressure want to understand why these decisions are being taken," the treasurer said.
"The Reserve Bank has an important role to play to explain the decisions that they take, and that's the point I made at the time."
Asked if Australians could expect a similar approach to tackling inflation by Ms Bullock, Dr Chalmers said she was a well-respected economist who was "fiercely independent".
The treasurer said it was yet to be seen if unemployment would have to rise for inflation to come back down.
"We want to see as many people in jobs as we can, but we've got to get on top of this inflation challenge, which is the primary challenge in our economy," Dr Chalmers said.
He said the economy was expected to slow considerably, pointing to developments out of China which the government was monitoring "incredibly closely".
The RBA has been steadily hiking the cash rate since May 2022, when it rose to 35 basis points from 10 basis points.
Annual inflation is currently around seven per cent and a long way from the central bank's preferred two to three per cent target range.
The unemployment rate is currently 3.6 per cent.
Australian Associated Press
