The Reserve Bank is set for its biggest overhaul in decades and is likely to soon have a specialist board with economic experts to set interest rates who will need to take more individual responsibility for their decisions.
The 294-page independent review of the Reserve Bank has called for a more transparent operation where press conferences are held after every meeting like the Federal Reserve does in the US with board members speaking publicly on occasion.
Its 51 recommendations include splitting responsibility for interest rates and general governance across two separate boards and moving to eight meetings a year instead of 11.
Treasurer Jim Chalmers has given in-principle support to all the recommendations which largely seek to ensure decisions about the cash rate are made with a broader input and that the reasons for its decisions are made clearer to the public.
“This is about bolstering the independence of the Reserve Bank, not diminishing its independence,” Dr. Chalmers said.
“My goal here throughout is a world-class central bank, which is more effective, more transparent, and more independent, calling on more expertise to make its important decisions,” he explained
Shadow treasurer Angus Taylor said the report included good work on improving the “intellectual diversity” of the board.
“We think that the appointments, and reappointments for that matter, should follow the recommendations laid out in the review. They should be merit-based,” Mr. Taylor said.
“The suite of reforms recommended by the three reviewers seeks to bolster the central bank’s leadership and decision-making and to help prevent communication missteps such as when current governor Philip Lowe suggested interest rates would stay at record lows until 2024,” reports Australian Associated Press.
Mr. Lowe said he will stay on as the head of the Reserve Bank, if asked, to oversee the wide-ranging overhaul of the institution.
“If I was asked to continue, I would. If I’m not asked to continue I’ll find another way to contribute to Australian society,” he said.
His position will come up for review later in the year and Mr. Chalmers said the review has not altered this process.
Dr. Lowe added that he didn’t take the review personally as one of nine board members and one of 1500 staff.
“We don’t always get it right, but we always try and do the right thing by the Australian people.”
Dr. Lowe agreed it was time for change and said the organisation would start implementing the suggestions overseen by a small leadership team.
He welcomed the suggestion to include more monetary policy and financial experts on the board but defended the “diligence and expertise” of the other existing board members.
Two new members have been selected to sit on the Reserve Bank board, bringing industrial and business experience.
Iain Ross and Elana Ruben will replace Wendy Craik and Mark Barnaba who are not seeking reappointment.
With Australian Associated Press