SYDNEY (Reuters) – An independent review of the Reserve Bank of Australia (RBA) is due to look at every aspect of monetary policy decision-making and the composition of its board, including how it communicates with the public and the inflation targets it should follow.
In an 18-page statement of issues released Thursday, the review committee said it will discuss whether monetary and fiscal policy should complement each other and how policymakers can be held accountable for their decisions.
“The terms give us the opportunity to make broad recommendations on the objectives and mandate of the Reserve Bank of Australia, the interaction between monetary, fiscal and macroprudential policy, as well as the way in which the RBA operates: including governance, culture, and management,” the three-person panel said in a statement. .
Treasury Secretary Jim Chalmers announced the independent review in July and its findings are due to be published by March of next year.
The Reserve Bank of Australia has come under scrutiny for falling short of its 2-3% inflation target for most of the past decade, and most recently provided guidance during COVID-19 that rates were not expected to rise until at least 2024.
Instead, the central bank was forced to reverse course and start raising interest rates in May as inflation soared to its highest level in two decades. It has since raised interest rates five times to 2.35% and is expected to raise again in October.
The review will look at whether the RBA should adjust its current long-term 2-3% inflation target, given that it has missed the scale over the past decade.
It has also been pointed out that the RBA’s board is made up of two RBA staff, the treasurer and six businessmen, while some other central banks have boards that are composed only of central bankers or monetary policy experts.
Participating in the session will be Caroline Wilkins, Governor of the Central Bank of Canada, Rene Fry McKibbin Professor of Economics at Australian National University, and former Treasury official Gordon de Breuer.