The Albanese government has recently revealed the most significant changes to the Reserve Bank of Australia (RBA) since the establishment of inflation targeting and formal independence in the 1990s. The landmark report, “An RBA Fit for the Future,” outlines a new vision for the central bank.

Key changes include:

• Transferring the power to set interest rates from the current RBA board to a new panel of nine monetary policy experts, who will meet eight times annually.
• The new panel will consist of six externally appointed economic experts, selected by the governor, treasury secretary, and a third party.
• Shifting the current RBA board’s focus towards overseeing the central bank’s general operations.
• Implementing a dual board model, similar to those in the Bank of Canada and Bank of England, starting from July next year.

Additionally, the RBA will be required to engage in more in-depth discussions on forecasts, strategies, and monetary policy issues. Board members will share increased responsibility and accountability, rather than the governor holding most of the authority.

Following interest rate decisions, the governor will be required to hold press conferences to explain the board’s views on policy and economic developments.

The review was initiated partly in response to criticisms that the RBA maintained low interest rates in the years preceding the COVID-19 pandemic. Additionally, the central bank has faced scrutiny for its pandemic-era forward guidance.

Treasurer Chalmers thanked the RBA review panel for their work and expressed a commitment to implementing the recommendations. Shadow Treasurer Angus Taylor also expressed support for the proposed reforms.