Treasurer Jim Chalmers initiated an independent review of RBA in July. His Findings?
The flexible inflation target had worked well for the past 30 years. The 2% to 3% inflation target in the monetary policy between the governor and treasurer was “about right”. The “on average over time” was a bit vague.
The review is also considering the role of the Treasury secretary on the RBA board and whether it is consistent with independence from the government. The reviewers raised the prospect of having a more formal and transparent application and appointment process.
Dr de Brouwer said the job of RBA board members was to represent the interests of the Australian people on price stability and full employment. Not to represent a particular “constituency”.
The current 9-member board included both setting monetary policy and governance of the bank’s operations. “It is unusual to have a single board do those two things together,” Ms. Carolyn Wilkins said at a Committee for Economic Development of Australia event in Sydney.
“And some people have suggested that gets split out.”
The Bank of Canada and Bank of England have a board of directors that oversees the management and administration of the bank. While separate monetary policy committees set interest rates.
Any potential recommendation to change the board structure would need to consider whether 2 boards would add bureaucracy to the central bank, she added.
Moreover, a legislative change to the Reserve Bank Act would also be required, which would be a “really high bar” to pass.