Australia treasurer aims to release central bank review mid-year

SYDNEY: Australian Treasurer Jim Chalmers said on Sunday the government would respond before the federal budget to the findings of a review looking into the monetary policy decision-making and board make-up of the Reserve Bank of Australia (RBA).

The independent review, announced by Chalmers in July, is assessing issues such as how the RBA communicates with the public and which inflation targets to follow.

Chalmers told ABC television he would receive its recommendations on March 31 and was committed to “responding and releasing it between then and the budget”, which the government usually unveils in May.

One aspect being considered was “the best way for the bank to communicate its decisions”, he said.

A decision whether to re-appoint RBA Governor Philip Lowe would be taken towards mid-year in consultation with Prime Minister Anthony Albanese and senior ministers, Chalmers added.

The review was called after the RBA undershot its inflation target of 2% to 3% for much of the last decade, and issued guidance during the COVID-19 pandemic that rates were not expected to rise until at least 2024.

In a bid to tame surging inflation, the RBA has made nine rate hikes since last May, and raised its cash rate 25 basis points on Tuesday to a decade-high of 3.35%, while flagging the likelihood of more hikes.

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The review is also weighing the make-up of the central bank’s board, which consists of two RBA staff, the Treasury Secretary and six business people, while the boards of some others are comprised of just central bankers or monetary policy experts.

Canadian central banker Carolyn Wilkins, Australian National University economics professor Renee Fry-McKibbin and former Treasury official Gordon de Brouwer are on the panel.

“It is a really important opportunity for us to look at the structures and processes and objectives of the Reserve Bank, and make sure that we’ve got world’s best practice going forward,” Chalmers told reporters in Brisbane.