The Reserve Bank of Australia (RBA) has unveiled a series of reforms to how it manages and communicates the country’s monetary policy.
Following an independent review of the RBA, which was commissioned by the federal government, the RBA board has agreed to update how it conducts monetary policy (i.e. the setting of the cash rate) and shares its thinking with the public.
As a result, Governor Philip Lowe said the RBA would make a series of changes, starting in 2024. They include:
- The board will meet eight times per year to discuss the cash rate, rather than the current 11.
- The governor will hold a media conference after each board meeting to explain the decision.
- Monetary policy meetings will last longer.
- Before each meeting, board members will be able to attend an internal RBA staff meeting, so they can hear from and ask questions of more staff.
“The less frequent and longer meetings will provide more time for the board to examine issues in detail and to have deeper discussions on monetary policy strategy, alternative policy options and risks, as well as on communication. Likewise, the staff will have more time for analysis, with less time spent preparing summaries of recent developments,” Governor Lowe said.
“The board will also be able to hear directly from more staff and have greater opportunity to request work on particular topics. And the post-meeting media conferences will provide a timely opportunity to explain the board’s decisions and to answer questions. This will complement our existing communications, including through speeches with Q&A. Together, this is a significant package of reform that will contribute to better decision-making and communication.”
RBA gets new leader
Meanwhile, the federal government has decided against awarding Governor Lowe a second seven-year term.
As a result, he will be replaced by the current deputy governor, Michele Bullock, on 18 September.
“I am deeply honoured to have been appointed to this important position. It is a challenging time to be coming into this role, but I will be supported by a strong executive team and boards. I am committed to ensuring that the Reserve Bank delivers on its policy and operational objectives for the benefit of the Australian people,” Ms Bullock said.
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