Australia’s central bank to get new rate-setting board under review shake up

Australia’s central bank is expected to get a new specialist board to manage monetary policy that will give independent expert members more responsibility for setting interest rates, a dilution of the bank’s traditional power over policy.

A 272-page review of the Reserve Bank of Australia (RBA) released on Thursday outlined a range of reforms from a more focused policy mandate, to fewer policy meetings and a separate board for the bank’s day-to-day operations.

Importantly for market confidence, the RBA’s new Monetary Policy Board (MPB) would retain its independence from government and its flexible inflation target of 2% to 3%.

It would have a simpler dual mandate of price stability and full employment, bringing it in line with most other major central banks, and aim to be more transparent on policy.

The current mandate is unusual among central banks in having a broad remit for the economic prosperity and welfare of the Australian people.

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