THE SQUIZ
A long-awaited review into the Reserve Bank’s operations has been released, and an extensive overhaul – the largest in about 30 years – is set to be rolled out by mid-2024. Treasurer Jim Chalmers, who commissioned the independent review, said he has agreed in principle to its 51 recommendations. You’ll be relieved to hear that we won’t list them all, but the key change will see the RBA board split in 2. One will set monetary policy/make interest rate decisions and will be made up of independent financial experts to ensure broader input into decision-making. The other will look after the bank’s general operations, like the currency supply. Chalmers says it’s all about “ensuring that the Reserve Bank is as strong and effective as it can be, now and into the future as well”.

GO ON…
You’re on the money – there’s a bit more to it. The review also suggested cutting the 11 annual board meetings down to 8. That’s notable because the idea is it would prevent (or at least slow down) the monthly interest rate rollercoaster Aussie mortgage holders have been strapped into over the past year. Another proposal would see the monetary board prioritising employment, not just inflation, when considering changes to the official cash rate. Coalition Treasury spokesman Angus Taylor is on board – he says those are a “good step in the right direction”. And many economists, including Deloitte’s Chris Richardson, gave the plan a tick, saying it would bring the Reserve Bank into line with its international counterparts. Nothing’s set in stone yet, though… Chalmers says taking action on the review’s recommendations will involve legislative changes and changes to be implemented by the RBA governor/current board.

AND WHAT DOES THE RESERVE BANK SAY?
Well, that brings us neatly to Governor Philip Lowe. His role has been under scrutiny since his pandemic claim that the Aussie cash rate/interest rates wouldn’t start going up until 2024. Since rates have since gone up at a record-breaking pace, quite a few people aren’t too happy with him… His 7-year tenure as governor ends in September, and Chalmers won’t say yesterday if it will be extended… But 2 board members whose tenures were about to expire have been replaced, with former Fair Work boss Iain Ross and Telstra director Elana Rubin named as replacements. For his part, Lowe welcomed the review and said the suggestion to split the board would “strengthen the monetary policy process”. Lowe also said he’s prepared to stay on as boss if he’s asked to. Watch this space…