Lowe announces shake-up at RBA, 8 meetings instead of 11

In a speech on Wednesday, the governor of the Reserve Bank confirmed that from next year, the central bank’s board will meet eight times a year, rather than 11 times, as is currently the case.

“Four of the meetings will be on the first Tuesday of February, May, August, and November. The other four meetings will be held midway between these meetings,” Philip Lowe said.

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“The exact dates for 2024 will be published soon and the dates for future years will be published well in advance.”

The board meeting will also be longer than is currently the case. The governor noted meetings will “typically start” on the Monday afternoon and then continue on the Tuesday morning.

“The outcome of the meeting will be announced at 2:30pm on the second day, typically a Tuesday, as is the case now,” Dr Lowe said.

Moreover, all board members will have the opportunity to attend an internal staff meeting some time before the board meeting, while the post-meeting statement announcing the decision will be issued by the board, not, as is currently the case, the governor.

The governor will, however, hold a media conference after each board meeting to explain the decision. This is expected to be held at 3:30pm.

Also among the changes, due to kick in next year, 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.

Moreover, 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 RBA and the Australian government. The board will also be tasked with overseeing the bank’s research agenda as it relates to monetary policy and aspects of financial stability.

Dr Lowe also noted the RBA 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.

Five-yearly “open and transparent reviews” of the monetary policy framework are also due to be held.

‘Substantial’ response to RBA review

According to Dr Lowe, these “significant” changes represent a “substantial” response to the recommendations outlined in the RBA review which was publicly released in April.

“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,” he 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.”

Additionally, the RBA governor said the new post-meeting media conferences would provide a “timely opportunity” to explain the board’s decisions and answer any 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.

Meanwhile, the RBA board has determined that a number of other recommendations would best be considered after the government has completed the necessary legislative process and the new monetary policy board has been established.

In particular, these recommendations relate to the publication of an unattributed vote count, all board members making regular public appearances, the establishment of an expert advisory group to engage with the board, and board papers being published with a five-year lag.

“These issues are interrelated. Practices differ across central banks, and they are often tailored to the country’s particular circumstances and institutional structure,” said Dr Lowe.

“The current board has therefore judged that these four issues are best considered by the new monetary policy board as a package.”

Dr Lowe said that an overarching principle the RBA board has sought to apply while working through the review’s recommendations is that the central bank should be “as transparent as it reasonably can in a way that is useful to the community”.

“We want the community to understand what we are doing, why we are doing it, and the factors we consider in making our decisions,” he said.

“The changes I have laid out are a significant step in this direction and the new board will have the opportunity to consider the merits of further steps.”