Thursday, August 4 2022

SYDNEY, July 20 (Reuters) – Australia will launch a review of the Reserve Bank of Australia’s (RBA) inflation target, monetary tools and board structure, it said on Wednesday. Treasurer Jim Chalmers, amid criticism of the central bank’s interest rate policies.

“Now is the time, given all the short-term economic challenges we face, some of the longer-term complexities we also face… to have the proper eye, an independent outside expert eye, on our Reserve Bank,” Chalmers told Australian Broadcasting Corp television.

The RBA has come under scrutiny for understating its 2-3% inflation target for much of the past decade, and more recently for giving forward guidance during COVID-19. that rates are not expected to rise until at least 2024.

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In a bid to stem soaring inflation, the RBA has instead hiked interest rates for three consecutive months to 1.35%, with another hike expected in August.

“I am interested in the breadth and depth of expertise and experience of the RBA board, the inflation targeting regime, its objectives and mandates, its governance, how it sets up,” Chalmers said.

Canadian central banker Carolyn Wilkins, Australian National University economics professor Renee Fry-McKibbin and former Treasury official Gordon de Brouwer will lead the independent review, media said, citing Chalmers.

Chalmers told ABC he had “three absolutely top-level, high-caliber people” leading the review.

“(They) will make sure we have the best set of arrangements and if there’s a better way to do it, let’s hear it,” he said.

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Reporting by Renju Jose; edited by Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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