2023-11-26 21:05:16
© Reuters.
SYDNEY (Reuters) – The Australian government will introduce legislation this week that gives independent central bank members more responsibility for setting interest rates, with a new board specializing in monetary policy.
The bill would implement recommendations from a review by the Reserve Bank of Australia (RBA), the country’s central bank, released in April, which called for legislation enacted by parliament, Treasury chief Jim Chalmers said on Sunday. .
The review set out a series of reforms, including a separate board at the RBA for day-to-day operations, fewer policy meetings and a simpler dual mandate of price stability and full employment, making it more in line with other major central banks.
The bill would reinforce the RBA’s independence from the government, including by revoking the Treasury chief’s power to override monetary policy decisions, he said.
Chalmers indicated initial agreement for all 51 recommendations made by the review. The main one was to divide the RBA board into two: one to deal with monetary policy and the other, for governance.
The review recommended that the new Monetary Policy Council (CPM) be made up of six external members with expertise in macroeconomics, the financial system, labor markets and the economy. Details of the new board will be finalized next month, Chalmers said.
The six external members of the current board are, for the most part, company executives. The RBA commander, his deputy and the Treasury Secretary are the other three members.
The review recommended that the changes take effect on July 1, 2024.
(Reporting by Renju Jose in Sydney)
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