The Reserve Bank of Australia (RBA) is set to undergo a major shake-up, with the government announcing its in-principle agreement to split the bank into two boards. The first board will focus on setting interest rates and the second board will be responsible for paying attention to the other aspects of the RBA’s management duties, such as issuing bank notes.
Treasurer Jim Chalmers is expected to announce the government’s in-principle agreement with all 51 recommendations of the RBA review report – An RBA fit for the future – when it is released on Thursday. This review was commissioned in July last year in an effort to bolster the central bank in the face of a more intricate global economic environment.
Over the past year, the central bank and its Governor Philip Lowe have faced close examination for how their monetary policy decisions, particularly concerning rate rises, have been articulated. As recently as November 2021, Dr Lowe informed Australians that it was probable the bank would keep the cash rate at 0.1 percent until 2024.
The review is expected to reveal that establishing two separate boards – one concerning monetary policy and another for governance – will ensure that decision making and governance agreements are effective.
