The Reserve Bank of Australia (RBA) is set to undergo a significant shake-up, following a review commissioned by Treasurer Jim Chalmers in July 2022.

This is the first review of the central bank since the RBA adopted an inflation target in the early 1990s to keep consumer price inflation between 2–3%, on average, over time.

The review was produced by an independent panel charged with identifying how to make the RBA “the world’s best and most effective central bank into the future” and examined three things:

• The RBA's transparency

• The RBA’s board members

• The RBA’s decision-making process regarding the cash rate

What were the findings?

The review made 51 recommendations, all of which have been accepted “in principle” by the federal government.

The most significant of these is that the central bank's board be split into two distinct boards.

The first, a monetary policy board, would be responsible for setting the cash rate and would be made up of the RBA governor, the deputy governor, the Treasury secretary, and six external members with expertise in macroeconomics, the financial system and labour markets.

This new board would meet eight times a year, rather than the current 11, giving them more time to discuss the available economic data before deciding the nation’s official interest rate. Board members would also be encouraged to speak more to give the public greater transparency on how they reach their decisions.

The second board would be in charge of corporate governance, and focus on the day-to-day operations of the central bank.

This new structure would bring the RBA more in-line with the central banks in Canada and England.

When will the recommendations be implemented?

The review recommended the government legislate changes to start from 1 July 2024.

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