The Panel to Examine Monetary, Fiscal, and Macroprudential Interaction
Review will issue recommendations by March 2023 at the latest.
Following criticism of the Reserve Bank’s recent performance, Australian Treasurer Jim Chalmers announced the terms of a review of the institution’s inflation target, policy tools, governance, and culture.
The review will be conducted by a three-person panel consisting of Carolyn Wilkins, a former Bank of Canada senior deputy governor, Renee Fry-McKibbin, an economics professor at the Australian National University, and former Treasury official Gordon de Brouwer, according to Chalmers.
“Australia is confronted with a complex and rapidly changing economic environment, as well as a range of long-term economic challenges,” said the treasurer. “This is a critical opportunity to ensure that our monetary policy framework is as effective as possible.”
The RBA has been chastised for remaining dovish when many of its peers were already hiking, a stance that has likely contributed to accelerating price growth. The Fed kept borrowing costs at an all-time low until May, when it raised rates more than expected.
In response to market pressure and concerns about its long-term viability, the RBA abruptly abandoned its control of bond yields late last year.
Governor Philip Lowe admitted the bank’s forecasting was “embarrassing,” adding to the reputational damage caused by its “disorderly” exit from yield control.