Three years ago, Treasurer Jim Chalmers initiated the biggest shakeup of the Reserve Bank of Australia in decades, splitting the bank into two boards – one for monetary policy and one for governance – and overhauling its communications approach.
Filling the monetary policy board with specialists from the markets, business and academia was intended to improve interest rate decisions, encourage greater contestability and reduce internal groupthink. This followed an independent review that found the board’s part-time members lacked the expertise to challenge the governor and the bank’s full-time staff and hadn’t voted against an RBA executive recommendation for at least a decade. The backdrop to Chalmers’ revamp, of course, was former governor Philip Lowe’s flawed forward guidance that the cash rate would not rise until 2024.
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