Finance Minister Jim Charmers will publish the first major review of the Reserve Bank of Australia (RBA) since the 1990s, scrutinizing its inflation target arrangements, policy tools, governance and culture.
“This is an important opportunity to roll the ball into a Reserve Bank review that countries need to desperately confirm that monetary policy setting will be most effective in the future.” He told reporters July 20th.
Chalmers emphasized that the review was not about “revolutionizing” Australia’s monetary policy, but about refining and reforming it.
“That’s my goal, and I’m going into this review with a truly open mind about the best combination of reserve bank institutional arrangements to have the best central bank in the world,” he said. ..
This review takes place in the midst of a surge in inflation after a decision to reduce cash rates to a record low of 0.1% over the long term.
As a result, the review looks at the “adequacy” of the inflation targeting framework and the interaction of fiscal and macroprudential policies, including during crises.
Treasury officials said they wanted the reviews to be “positive” and build public confidence in the reserve bank rather than “exercises to shift negative accusations.”
“I hope this isn’t just about taking potshots with the governor or the board. I don’t want to do that mainly about the secondary decisions made by the board, especially recently.
“Obviously, history is part of what the review panel considers, but their focus, certainly my focus, is to provide reserve banks with the best combination of institutional arrangements and they will make the right decisions in the future. It’s about making sure that we can help you do it, “Chalmers said.
RBA welcomes reviews
A final report with clear recommendations is scheduled for March 2023, giving the panel about half a year. This is a relatively short review period compared to other reviews.
Chalmers admitted that it was a short time frame, but said he was not considering extending the review at this time. Moreover, the members of the panel and the governor have raised no concerns.
RBA Governor Philip Lowe welcomed the presentation of the review in his speech and said the board and staff are looking forward to participating in the process.
“This is an opportunity to review monetary policy arrangements and ensure that they fit the objectives of future challenges.” He said..
The review will be conducted by Carolyn Wilkins, an outside member of the Bank of England’s Monetary Policy Committee and former Senior Vice President of the Bank of Canada, and Lenny Fry McKibbin, Australia’s leading scholar of macroeconomics. And Gordon de Blower. Secretary of public sector reform.