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The frequency of the board's meetings will reduce from 11 to provide additional time to examine the monetary policy issues in detail.
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RBA review reduces cash rate meetings
13 July 2023
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The independent review of the Reserve Bank has ruled that from 2024 the RBA board will meet eight times a year rather than 11 times as is currently the case.
After receiving the independent review’s recommendations the board decided to implement 10 changes to the RBA’s monetary policy processes and communication.
The reduction from 11 meetings to eight was part of the changes, with four of the meetings to be held on the first Tuesday of February, May, August and November and the other four meetings to be midway between them.
Dr Lowe said dates for the 2024 meetings would be published soon with the dates for future years to be provided well in advance.
He said the fewer meetings would give the RBA more time to determine what decision needs to be made.
“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,” Dr Lowe said.
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“Likewise, the staff will have more time for analysis, with less time spent preparing summaries of recent developments.”
Dr Lowe said the review also resulted in lengthening the monetary policy board meetings. He said they would instead start on Monday afternoon and continue onto Tuesday morning with the decision to be announced at 2:30pm on the second day of the meetings, usually a Tuesday.
The other significant change due to the review was that the governor will hold a media conference after each board meeting to explain the decision, which Dr Lowe said would be held at 3:30pm.
The other recommendations that Dr Lowe revealed the RBA would be implementing were:
- All board members will be able to attend an internal staff meeting before the board meeting, which will allow them to hear directly from, and ask questions of, a broader range of staff.
- The post-meeting statement announcing the decision will be issued by the board, not, as is currently the case, the governor.
- 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.
- The board, rather than the governor, will be the signatory to the Statement on the Conduct of Monetary Policy, the document that records the common understanding of monetary policy between the RBA and the Australian government.
- The board will oversee the Bank’s research agenda as it relates to monetary policy and aspects of financial stability.
- The Bank 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.
- The board will work with the Treasury to undertake five-yearly open and transparent reviews of the monetary policy framework.
Speaking to the Economic Society of Australia business lunch Dr Lowe also addressed the RBA’s decision to hold the cash rate unchanged at 4.1 per cent.
“The board is very conscious that monetary policy operates with a lag and that the full effects of the tightening to date have not yet been felt,” said Dr Lowe.
“It takes time for households and businesses to adjust their spending and investment plans, and there are still significant resets of low fixed-rate loans to come.”
“It is possible some further tightening will be required to return inflation to target within a reasonable timeframe. Whether or not this is required will depend on how the economy and inflation evolve.”
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