Sweeping changes to Reserve Bank of Australia give equal weighting to employment and inflation, and mandate greater transparency
Achieving full employment will get equal weighting with fighting inflation for a new specialised monetary policy board set up within the Reserve Bank, according to wide-ranging changes recommended by the first major RBA review in four decades.
The review’s report, released on Thursday, details 51 recommendations proposed by a three-person panel. The treasurer, Jim Chalmers, said the Albanese government “agrees in-principle” with all of them, and will now press on to implement them by July 2024.In an attempt to bolster the expertise of those making interest rate decisions, a new monetary policy board will be set up within the RBA.
Those external members, though, will have “deeper economic and financial expertise, and more information, time and staff support to fully engage in the policy process”, the review recommended. A separate board will be created for managing the bank’s operations itself, such as currency issuance and IT issues.
Instead of meeting 11 times a year, the monetary board would meet eight times a year, bringing it more into line with overseas peers. Greater accountability and transparency will be required, however, and with a chief communications officer appointed to enforce those objectives. The RBA lifted the cash rate 3.5 percentage points in 10 consecutive meetings up until this month – the sharpest increase in interest rates since it adopted inflation targeting in the early 1990s – with the bank’s minutes of its rates meeting
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