Embracing the recommendations of the Reserve Bank of Australia (RBA) review will allow the bank to emerge as a stronger institution, according to governor Michele Bullock.
In a speech to the Australian Business Economists Annual Dinner on Wednesday night, Ms Bullock clarified that she is “100 per cent behind” the major changes underway to implement the 51 recommendations made by the independent review.
“The RBA is a great institution with a long history of serving the Australian people. But as times change, we must change,” she said.
Ms Bullock laid out her vision for a more diverse, open, and inclusive RBA with a strengthened monetary policy decision-making process, which, she said, will prepare it for the future.
“My vision for the bank is to be an institution of diverse perspectives and inclusive processes. I want our people to share their views, knowing that they will be listened to respectfully,” she noted.
“I also want the bank to be open to fresh ideas from outside, by increasing and diversifying our external engagements and leveraging the experience of our people with external expertise. I want us to be an institution that communicates well with both its people and the Australian public.”
In July, former governor Philip Lowe flagged a number of changes to the RBA’s processes, including a move to eight board meetings a year instead of the current 11.
Expanding on these changes, Ms Bullock explained that board members will now attend a “policy issues meeting” roughly 10 days before each board meeting.
“Currently, board members receive the material for the board meeting four days prior to the meeting. The new process will therefore engage board members with the policy issues earlier,” she said.
“This new meeting will assemble a group of staff with the right experience and expertise to give the members insights and diversity of perspectives on the key issues relevant for policy. It will provide analysis of issues that are relevant to a few upcoming meetings, not just the immediate one.”
The longer board meetings will begin on a Monday afternoon and involve presentations from RBA staff on the state of the economy and markets, as well as the outlook.
“This will mean that the board spends around 3.5 hours discussing these issues – about twice as much as now. The idea is not for longer presentations but for members to have more time to discuss, probe, and deepen their understanding of the issues,” said Ms Bullock.
The board will then reconvene on Tuesday morning to consider its next policy decision.
“This will have the benefit of members being able to reflect overnight and raise any further issues or questions before the policy decision is made. We have allocated plenty of time to debate and discuss the merits of different courses of action,” Ms Bullock said.
Starting next year, the RBA will also shift its post-meeting communications to involve the entire board, as opposed to solely the governor, and will include a media conference after each meeting.
“Deep and informed board decisions need to be backed up by explanations that the public understand. I will therefore be focused on enhancing our communications,” said Ms Bullock.
As part of this focus, the RBA recently announced the appointment of Sally Cray to the newly created role of chief communications officer.
While the central bank is making progress with its efforts to provide clearer explanations, including through plans to shorten and simplify its quarterly statement on monetary policy, Ms Bullock conceded that there is still “much more to go”.
“I want the bank under my leadership to be an institution that continually reflects and evolves. The board is no different,” she said.
“With longer meetings we will have opportunities to reflect on our processes, on what sort of analysis would be helpful for upcoming meetings and whether our communication is hitting the mark.”
Culture and leadership are also a priority for Ms Bullock, she said, and noted that since the review, the central bank has identified a number of areas where its culture does not sufficiently encourage discussion and idea sharing.
Conceding that she needs to lead by example, Ms Bullock said change must come from the top, with training and support set to be given to leaders and executives to help them become more open and inclusive.
“I am encouraging more active debate and challenge than we have seen in the past, including of my own views, in a respectful and constructive manner,” she said.
“Changing culture takes time. But I know our staff are committed to making the bank as effective as it can be, and I am confident that we will see material change over coming years. I hope that will also be visible to those outside the bank.”
The changes to the RBA’s monetary policy decision making and communication, as announced by former governor Lowe, will begin to take effect from the bank’s first meeting of next year on 5–6 February 2024.
