Changes would help "steer a better course," exec says
The Real Estate Institute of Australia has expressed its support for the changes recommended in a sweeping review of the Reserve Bank.
The review recommended changes including broadening the RBA’s objectives to include employment; appointing external economists who specialise in macroeconomics, finance and the labour market; reducing the frequency of RBA meetings; and increasing the central bank’s collaboration with the Treasury – all of which will help lead to better economic outcomes, according to REIA president Hayden Groves.
The months-long review was initiated in the wake of a series of policy mistakes and optics blunders over recent years that has drawn criticism for the central bank. The review made 51 recommendations for changes to the RBA, including the appointment of a second board of experts to make cash rate decisions.
Treasurer Jim Chalmers said the changes would “ensure Australia’s central bank and monetary policy arrangements are as strong and effective as they can be into the future.”
REIA favours changes
“Of the 51 specific recommendations, which have been banded into 14 broad categories, there are a number that are particularly important in changing the current approach,” Groves said.
The recommendations singled out by REIA are:
- Dual monetary policy objectives of price stability and full employment, with equal weight given to both
- Transparency about how the RBA is balancing those two objectives, including how long inflation is expected to be significantly away from the midpoint of its target range, and why and how long labour market conditions are expected to deviate from full employment
- Assess future impacts and communicate those assessments
- Increase collaboration with the ATreasury on fiscal and monetary policy
- Creation of a monetary policy board with greater economic expertise
- Meeting eight times per year rather than the current 11, allowing for more economic data to be available before rate decisions are made
Read next: REIA welcomes “evidence-based” RBA rate call
“Whilst the recommended changes will not eliminate fluctuations in economic activity, the impact of external shocks and, importantly, housing supply and affordability, they will, if implemented, reduce the amplitude of the cycles,” Groves said. “Something which would have helped steer a better course in the post-COVID era.”
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