Australia central bank to get new rate-setting board under review recommendations

The central bank should keep its flexible inflation target of 2-3 per cent but aim to return inflation to the mid-point rather than average it over time. Importantly for market confidence, the RBA’s Monetary Policy Board (MPB) would retain its independence from government control.

Treasurer Jim Chalmers has indicated in-principle agreement to all 51 of the recommendationsmade by the review which he set up last July with an eye to making the RBA “fit for the future”.

The review recommended the RBA’s current single board be split into one for monetary policy and one for governance with an external chair that would oversee operations such as human resources, finance, risk management and technology.

The MPB would comprise the governor and deputy governor of the RBA, the Treasury Secretary and six external members with expertise of open-economy macroeconomics, the financial system, labour markets and the supply side of the economy.

The review recommended the MPB meet eight times a year, instead of the current 11 meetings, and an unattributable record of voting should be published in the post-meeting statement and minutes should include points of disagreement.