Fresh off the news the Reserve Bank will cut the number of its yearly meetings from 11 down to 8, they have also announced they will not be renewing the contract of governor Philip Lowe.
The central bank will be meeting less often each year but those meetings will be longer in duration, with the governor of the day to hold a press conference after each one to improve transparency and communication to the public.
The longer meetings are planned to start on the Monday afternoon and run through to the Tuesday morning with announcements made on Tuesday afternoon by the board, instead of the governor as is currently the case. The governor will then hold the following press conference shortly after the announcements.
On top of this effort to improve transparency, the RBA will undertake an open review of the nation’s monetary policy framework every five years.
Outgoing governor Philip Lowe told the ABC it will mean borrowers can expect monetary decisions to examined and discussed in more detail, increasing their effectiveness.
“The less frequent and longer meetings will provide more time for the Board to examine issues in detail and to have deeper discussions on monetary policy strategy, alternative policy options and risks, as well as on communication,” Dr Lowe said.
“Likewise, the staff will have more time for analysis, with less time spent preparing summaries of recent developments. The Board will also be able to hear directly from more staff and have greater opportunity to request work on particular topics.
“And the post-meeting media conferences will provide a timely opportunity to explain the Board’s decisions and to answer questions. This will complement our existing communications, including through speeches with Q&A.
“Together, this is a significant package of reform that will contribute to better decision-making and communication,” he said.
The changes come as Philip Lowe ends a tumultuous period as head honcho of the nation’s central bank, steering the RBA through COVID and the last year of monthly interest rate hikes.
Borrowers probably shouldn’t be rejoicing too much, as it is unlikely the change will lead to any reductions in interest rates in the foreseeable future.
Federal Treasurer Jim Chalmers this week emerged from a cabinet meeting and announced Michele Bullock as Mr Lowe’s replacement when his contract expires in September.
While governor Lowe has been made somewhat of a media scapegoat for struggling borrowers trying to make ends meet in a cost-of-living crisis, those borrowers will need to realise he alone isn’t responsible for recent cash rate decisions, the entire RBA board is and Ms Bullock was a large part of things as the deputy governor.
ABC business editor Ian Verrender said the new appointment will disappoint borrowers if they are hoping it will mean a change in approach from the RBA.
“What this means to interest rates is really absolutely nothing. I don’t think there has been any criticism of the fact that the Reserve Bank has actually raised interest rates,” he said.
“Every Central Bank around the world in every developed nation has raised interest rates, many of them at a far greater pace than Australia has, and there are reasons why we’ve lagged in terms of the rate hikes. America is up around five, New Zealand is way above where we are, the UK and the European central banks both putting through double hikes just recently.
“So these changes will not affect monetary policy whatsoever. I guess from a positive point of view, we are at or near the peak in interest rates right now.”
“We might have one more to go, so, you’d have to say Michele Bullock will probably not face the kind of public criticism that Philip Lowe has, but she was the deputy governor during this whole period and she has presided with Philip Lowe over these interest rate hikes.”