From Breakingviews: Canberra is pushing the Reserve Bank of Australia to get overdue governance upgrades. But peers hoping the review yields new strategies for cooling supply-side price hikes will be disappointed, says AntonyMCurrie
For a central bank, the RBA is particularly quirky. Of the nine-person board that votes on interest-rate moves, only two work for the regulator, compared to a majority at the Bank of England and the U.S. Federal Reserve. The remaining seven are part-timers, and only two of them are trained economists while the rest are drawn from the business world. One seat is allocated to the top civil servant at the Treasury.
The authors of a review of the central bank handed on Friday to Australia’s Treasurer Jim Chalmers have floated ideas like packing the board with more economists to spur a more intellectually robust debate about rate policy. They may also recommend the governor hold a press conference after some or all monetary policy decisions as other institutions do. Another idea is creating a second board to oversee non-interest rate business.
Another major task for the review panel was assessing how the bank combats inflation, which hit 7.8% in the year to December. Trouble is, like other central banks, the tools at the RBA’s disposal are designed to respond to demand-driven signs of price hikes, like wages increases, not supply-side events like pandemics, trade sanctions and wars.
Treasurer Jim Chalmers on March 31 received the final report on the review of the country’s central bank that he unveiled last July. He said on March 30 that he intends to release his initial take on the report by mid-April. The three-person panel who undertook the review of the Reserve Bank of Australia are Carolyn Wilkins, currently an external member of the financial policy committee of the Bank of England and a former senior deputy governor of the Bank of Canada; Professor Renée Fry-McKibbin of the Crawford School of Public Policy of Asia and the Pacific; and Dr Gordon de Brouwer, secretary for public sector reform.Opinions expressed are those of the author.
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