Highlights
The Australian government today has released a report of an expert panel charged with reviewing the operations of the Reserve Bank of Australia. Australia's Treasurer, Jim Chalmers, has announced that the government agrees in principle to all of the report's recommendations and noted that these new arrangements are expected to be implemented by mid-2024. He stressed that these changes will not compromise the independence of the RBA from the government.
The RBA will have a new monetary policy board consisting of the RBA Governor and Deputy Governor, the Secretary of the Treasury Department, and six externally-appointed experts. The review argues that there should be greater economic expertise among external members of the board so that the board is better able to challenge the advice given by the RBA staff.
The number of scheduled policy meetings per year will be reduced from eleven to eight, and each meeting will be followed by a media conference by the Governor. The review argues that reducing the number of meetings per year will allow more thorough analysis and deliberations ahead of policy decisions.
The RBA will retain its current inflation target of 2.0 percent to 3.0 percent, but will also be tasked with"dual monetary policy objectives of price stability and full employment, with equal consideration given to each. The reviews argues that the RBA's long-standing flexible approach to inflation targeting has generally worked well and should be continued.
The review follows criticisms of the RBA's performance in recent years, with officials' inflation forecasts proving to be inaccurate, and policy rates raised much sooner than its guidance had indicated. Governor Philip Lowe's term expires in September but the government has not announced whether he will be re-appointed.
The RBA will have a new monetary policy board consisting of the RBA Governor and Deputy Governor, the Secretary of the Treasury Department, and six externally-appointed experts. The review argues that there should be greater economic expertise among external members of the board so that the board is better able to challenge the advice given by the RBA staff.
The number of scheduled policy meetings per year will be reduced from eleven to eight, and each meeting will be followed by a media conference by the Governor. The review argues that reducing the number of meetings per year will allow more thorough analysis and deliberations ahead of policy decisions.
The RBA will retain its current inflation target of 2.0 percent to 3.0 percent, but will also be tasked with"dual monetary policy objectives of price stability and full employment, with equal consideration given to each. The reviews argues that the RBA's long-standing flexible approach to inflation targeting has generally worked well and should be continued.
The review follows criticisms of the RBA's performance in recent years, with officials' inflation forecasts proving to be inaccurate, and policy rates raised much sooner than its guidance had indicated. Governor Philip Lowe's term expires in September but the government has not announced whether he will be re-appointed.
Definition
Global-FYI tracks critical developments fon the global markets including political news, special central bank announcements, and substantial moves in the financial markets.
Description
Major political events and special announcements by the global central banks can shift both the short-term and long-term outlooks for the global economy and financial markets.
