Where to next for the Reserve Bank?

Australia’s monetary policy regime, with an independent Reserve Bank charged with targeting inflation of between 2 and 3 per cent, has been a cornerstone of the nation’s economic success in recent decades. The Bank successfully hit that target for much of the past quarter-century, and Australians’ incomes rose.

But Australia’s monetary policy framework is now squarely back in the spotlight. The Reserve Bank has failed to hit its inflation target for the past seven years. Monetary policy has been under strain globally, as interest rates have fallen and conventional monetary policy has become less potent. Most major central banks are reviewing their monetary policy frameworks. Australia, so far, is a notable exception. 

The international think tank, the Organisation for Economic Cooperation and Development (OECD), has called for a wholesale review of monetary policy in Australia. Both major parties are now on board, which means there will be a review no matter who wins the next federal election. But what should be on the table for any review? What can Australia learn from central bank reviews abroad? Do central banks still have the tools they need to manage their economies, or does fiscal policy need to step up?

In this Grattan Webinar, our panel of experts will identify what a review of Australia’s monetary policy framework should cover, and what it should find.

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