Reserve Bank overhaul can help drive future prosperity

Major changes mooted for the Reserve Bank following its first external review in 40 years will be a success if they strengthen the bank’s capability, fostering greater economic certainty for business and the broader economy.

The wide-ranging review, released today, has made a number of recommendations including the establishment of a new monetary policy board and enhanced transparency obligations.

“While we will carefully consider the breadth of the review’s recommendations, on initial consideration it presents a range of measures designed to improve the governance and performance of the Reserve Bank,” ACCI chief executive Andrew McKellar said.

“Well-advised monetary settings are crucial to providing necessary foundation that allows businesses to invest, to expand and to deliver a stronger economy with improved employment opportunities.

“The dual board structure, which mirrors central bank models in the UK and Canada, can allow for the expansion of monetary policy expertise, while changes to encourage greater transparency are intended to bolster public confidence in price stability.

“For the RBA to ensure price stability and full employment, it must have the legitimacy and credibility that come from having clear, carefully specified objectives, and being accountable for its outcomes.

“Business also welcomes the reaffirmed commitment to the independence of the bank and continued support for the flexible inflation targeting framework of 2-3 per cent.”

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