Reserve Bank of Australia Review Focused on Board and Transparency
(21 July 2022 – Australia) The core purview of the Reserve Bank of Australia (RBA) will be scrutinised in the first review of the central bank’s operations in a generation.
Australian Federal Treasurer Jim Chalmers asserts that the review is to ensure "we have the world's best and most effective central bank" with the board structure, experience and expertise, composition and its appointments process part of the review. A report with recommendations for the federal government is to be delivered by March 2023.
Prior to the recent federal election both major parties had committed to an inquiry into the RBA, with Jim Chalmers in particular stating that Labor supported an investigation of the central bank’s “goals and objectives, tools and levers, processes and public commentary”.
Treasurer Jim Chalmers has released the terms of reference for a wide-ranging review of the central bank, including its primary task of inflation targeting in a range of two and three percent. Having a specific target for inflation, but not other economic indicators, has also been questioned in recent years. The review follows a challenging period for the RBA, which lowered the cash rate to a record low of 0.1 percent during the earlier stages of the pandemic but recently adopted a hawkish stance to reign in inflationary pressure with sharp rate rises.
“What we'd like to do is to give our Reserve Bank the best set of arrangements, the best mandate objectives, the best board that we can, so that it can make good decisions into the future about Australians interest rates. I'm not interested in an exercise in taking pot-shots at the bank or taking pot-shots at the governor. I'm really forward looking and trying to make sure that we learn from recent experience to improve the reserve bank into the future” Mr Chalmers stated.
"Australia is facing a complex and rapidly changing economic environment, as well as a range of long-term economic challenges. This is an important opportunity to ensure that our monetary policy framework is the best it can be, to make the right calls in the interests of the Australian people and the economy. The review is about ensuring we have the world's best and most effective central bank into the future” Mr Chalmers said.
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