Media Release Review of the Reserve Bank of Australia

The Bank welcomes today’s release of the Review of the Reserve Bank and the government’s response. The Review is comprehensive and covers the Bank’s objectives and responsibilities, the framework for monetary policy, the governance of the Bank and the way the Reserve Bank Board and the Bank operate. The Bank thanks the Review Panel and Secretariat for their work and all those who provided submissions.

Governor Philip Lowe welcomed the Review Panel’s support for the current monetary policy framework in Australia, including the flexible inflation target and the operational independence of the Bank. He also welcomed the support for the Council of Financial Regulators and the explicit recognition of the Bank’s responsibility for financial stability.

The Review recommends the establishment of separate boards for monetary policy and governance of the Bank. This change can help strengthen both the operation of monetary policy and the way the Bank is governed. It will require changes to the Reserve Bank Act 1959, which is a matter for the Australian Government and Parliament. The Bank will work constructively to ensure that this and the other recommended changes to the Reserve Bank Act strengthen the Bank and the way it operates. It will also work constructively with the Treasurer on an updated Statement on the Conduct of Monetary Policy.

The Review makes a number of recommendations regarding how the Board works, including the frequency of meetings and the Bank’s approach to communication. The Board will consider these issues over coming meetings and develop and implement a new set of arrangements.

The Review also makes recommendations that go to the way the Bank operates. These include appointing a Chief Operating Officer, elevating the communication function, enhancing the processes supporting the Board and monetary policy strategy, and continuing to invest in the diversity and skills of our leadership team. The Bank will develop a plan to implement these changes in the most effective way.

The Governor said: ‘The Review Panel rightly acknowledged the substantial contribution the Bank has made to Australia’s economic success and the skills and dedication of the staff. It also acknowledged the RBA is highly regarded and respected in Australia and overseas. The recommended changes will build on that strong foundation and strengthen the Bank’s governance and decision-making processes. They will help us deal with the complex world in which we operate as we strive to promote the economic welfare of the Australian people.’

A media conference will be held at 12pm AEST. Contact RBAInfo@rba.gov.au for details. The conference will also be broadcast live.

Background

The Reserve Bank is responsible for monetary policy in Australia, the determination of payments system policy, maintaining a stable financial system, issuing the nation’s banknotes, operating the core of the payments system and providing banking services to government.

The Review of the RBA was announced by the Treasurer, the Hon Dr Jim Chalmers MP, in July 2022. The Reserve Bank assisted the Review Panel in several ways, including through the provision of staff for the Review Secretariat, individual and group discussions, the provision of information in response to questions along with a large number of related documents. Staff were also invited to make public or private submissions, respond to a confidential survey and participate in focus groups. The Review was handed to the government on 31 March, and it was issued along with the government’s response by the Treasurer on 20 April.