Yesterday the government released the independent review of the Reserve Bank of Australia (RBA), along with confirmation that it would accept all of its recommendations.
I’m not going to go over all 51 of them here but will say that on balance it appears to be little more than tinkering on the margin, an outcome that was always likely given the authors: a former Canadian central banker, a former Treasury bureaucrat and an academic.
It must be open season on the Reserve Bank of Australia (RBA), because the central bank was recently savaged by both Deloitte Access Economics and business journalist Alan Kohler, for very similar reasons. First Deloitte:
“Our view remains unchanged – the additional 50 basis points of increases earlier this year were unnecessary, and have prompted a further downgrade in Australia’s growth outlook.
Last week witnessed two fascinating developments in the monetary realm. First, the Reserve Bank of Australia (RBA) put a halt to its tightening cycle, citing the long and variable lags of monetary policy and the need to assess the impact of the interest rate hike on the economy:
“The Board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt.
The Reserve Bank of Australia (RBA) ended its run of ten consective rate hikes at its meeting today, leaving the cash rate unchanged at 3.6%. That’s ten hikes excluding January of course, which for some reason is a month during which the RBA Board does not meet.
Was there a case for a pause?