Aussies slam major overhaul of the RBA as ‘too little too late’

Public outcry has erupted as Australians express their strong dissatisfaction with the recent announcement of major changes to the Reserve Bank of Australia (RBA) in the aftermath of a series of significant interest rate hikes, many labelling it “too little too late”.

During his Address at the Economic Society of Australia (QLD) Business Lunch in Brisbane on Wednesday, July 12 RBA Governor Philip Lowe set out the raft of “significant” changes to the RBA Board after a thorough governmental review.

“At its recent meetings, the Board has spent time discussing the Review’s recommendations,” Lowe said.

“The world we face is increasingly complex and it is right to re-examine how we make and communicate monetary policy decisions and how the RBA is managed.

“Together, these changes are significant and represent a substantial response to the recommendations of the Review.”

Some of the changes Lowe announced include:

1. From 2024, the Board will meet eight times a year, rather than 11 times as is currently the case.
2. The Board meetings will be longer than is currently the case.
3. All Board members will have the opportunity to attend an internal staff meeting some time before the Board meeting. This will allow them to hear directly from, and ask questions of, a broader range of staff.
4. The post-meeting statement announcing the decision will be issued by the Board, not, as is currently the case, the Governor.
5. The Governor will hold a media conference after each Board meeting to explain the decision. The media conference is expected to be held at 3.30 pm.
6. The quarterly Statement on Monetary Policy will be released at the same time as the outcome of the Board meeting (in February, May, August and November), rather than on the following Friday as is currently the case.
7. The Board, rather than just the Governor, will be the signatory to the Statement on the Conduct of Monetary Policy, which is the document that records the common understanding on monetary policy between the RBA and the Australian Government.
8. The Board will oversee the Bank’s research agenda as it relates to monetary policy and aspects of financial stability.
9. The Bank will continue with its current approach to climate change analysis, focusing on the implications of climate change for the economy, inflation and the financial system.
10. The Board will work with the Treasury to undertake five-yearly open and transparent reviews of the monetary policy framework.

The changes come in the wake of mounting criticism directed towards the RBA due to its swift implementation of interest rate hikes and its pre-pandemic operational strategies, which have come under intense scrutiny amidst the global economic downturn.

Although there may have been a hope that the overhaul would appease discontent caused by the recent series of interest rate hikes, the reality turned out to be quite different.

Too little too late.

In the name of god go, just go.

— B4Bear (@B4bearau) July 12, 2023

Now it is time to cut Phillip Lowe.

Lowe must go.

— Jake Winker Frogen (@JWFrogen) July 12, 2023

Just means bigger raises 8 times a year instead of 12 smaller one.

— Chris (@Chris_198011) July 12, 2023

He has left reform until very late in his term

— Rob Buist Obstetrics (@buist_rob) July 12, 2023

Sadly out of touch with the Australian public. These changes are superficial and designed to distract attention from bad policy making. It’s time a new board was appointed

— Toecutter (@HRHKJ4) July 12, 2023

The changes are set to take effect from February 2024.