Tough gauntlet ahead for new Reserve Bank chief

The job of Reserve Bank of Australia's (RBA) governor might be one to dodge at the moment, but having waited 38 years for the opportunity I guess new Governor Michele Bullock was not going to say no.

There are a lot of challenges sitting in her in-tray from day one, including expansionary federal and state government policy; increasing red tape; inflationary energy prices; recommendations from the review of the RBA; the high probability there will be a recession; housing prices that refuse to deflate; plus the decoupling from China.

In this day and age of portfolio careers, 38 years is a long time to work for the same business. It almost speaks lack of ambition. It's certainly a career lacking in that most modern of qualifications-diversity.

I'd certainly find it more reassuring if the new bank governor had experience in what some call the "real world."

Being RBA governor doesn't require Nobel Laureate-level academic prowess, but it does require an understanding of how the world works. Setting interest rates is an art as much as a science.

Graphs and tables can tell you so much, but having tried to negotiate the business world amongst the facts and figures that inform them can tell you so much more.

Michele Bullock is replacing Philip Lowe, who is portrayed by many as a failure. As the current deputy governor, if that is true, then shouldn't Lowe's replacement share some of the blame?

But we probably invest too much importance in the governor, and Ms. Bullock comes to the role at a time when the government is determined to make the board more accountable, and less reliant on one economist.

If the idea of a separate board of five economists to set interest rates is adopted, then her role will be skewed toward managing the rest of the operation.

As Lowe's term ends the challenges for the central bank grow larger. Some say that the inflation target of 2-3 percent on average over time is too vague.

The RBA's target is now going to get even vaguer because it is being given the mutually incompatible twin targets of inflation between 2 and 3 percent and full employment.

What is full employment?