Factbox: Key Recommendations from Australia’s RBA Review

Finance


SYDNEY (Reuters) – Australia on Thursday announced a review of the Reserve Bank of Australia. This is the first external study of central banks and monetary policy conduct in 40 years. The report makes 51 recommendations, including moving to a clearer monetary policy framework and strengthening accountability.

Here are the key recommendations of the report:

clearly defined goals

“The RBA’s monetary policy objective should be articulated as a dual mandate to contribute to price stability and full employment. have to be balanced.”

Clarifying the inflation target

“The current inflation target verbiage is that inflation should be 2-3% ‘on average, in the long run’. Instead, the RBA needs to explain how it is using that flexibility. How quickly we’re aiming, the assessment of full employment, and how financial vulnerabilities and other considerations, if any, are factored into that decision.”

deepen understanding

“Information sharing between the RBA and government should be enhanced on risks, scenarios and policy constraints. there is.”

regular review

“To ensure that the RBA’s approach to monetary policy remains relevant in the changing economic environment, the review recommends a review of the monetary policy framework and tools every five years.”

Legislate the role of financial stability

“This review calls for a stronger foundation for the clarification of the RBA’s financial stability role and its responsibilities. It requires clear accountability to and close cooperation between regulators.”

Addressing climate risk

“The RBA should continue its work to understand the impacts of climate change on the economy and financial system and take further steps to incorporate physical and transition risks into its analysis and modeling.”

Restructuring of the Monetary Policy Committee

“Monetary policy should be set by a dedicated Monetary Policy Committee, whose members can bring an independent and informed view of monetary policy and challenge the views of others firmly. Members should be able to contribute significantly to decisions through their expertise in such areas: the macroeconomics of an open economy, the financial system, the labor market, or the supply side of an economy, and under uncertainty. in the context of decision-making.”

improve the process

“The RBA and the Monetary Policy Board need to make changes to deepen the Board’s deliberations on monetary policy and make them open to a wide range of input. (This includes increasing the time spent on policy and strategy.) It will provide Board members an opportunity to hear the views of the broader RBA staff and provide staff support for external Monetary Policy Committee members.”

Enhanced transparency

“Members of the monetary policy committee should be more accountable for their role in setting monetary policy. They should be expected to discuss Board decisions publicly from time to time. , statements issued after the policy meeting should be agreed by them and published in their names.”

Establishment of Governance Committee

“The Governance Committee should be established to provide guidance and oversight to RBA management in the operation of the organisation. Within the RBA, there should be a clear division of responsibilities between the Governance Committee, the Monetary Policy Committee and the Payment Systems Committee.”

Edited by Alasdair Pal, Sydney. Edited by Stephen Coates

Our Standards: Thomson Reuters Trust Principles.

Alasdair Pal

thomson Reuters

Alasdair leads the team responsible for breaking news in Australia, New Zealand and the Pacific. Before moving to Sydney, he covered general news in New Delhi, reporting from the frontlines of the coronavirus pandemic in India and unrest in Kashmir, and did long-running coverage in Pakistan and most recently Sri Lanka. rice field. Ongoing economic crisis. His coverage of the 2019 Islamic State suicide bombing in Sri Lanka was highly acclaimed by the Asian Publishers Association. He previously worked as a financial reporter in London with a particular interest in hedge funds and accounting fraud. Signal app phone number: +61439529540



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