👉 Background: The Reserve Bank of Australia is responsible for ensuring financial stability in Australia. And, over the past 12 months, the RBA and its cash rate decisions have become one of the hottest topics… every single first-Tuesday-of-the-month.

👉 What happened: In July 2022, Treasurer Jim Chalmers began an independent review of the central bank. The plan was to look at all things RBA-related (Think: inflation targets, communication about interest rates, board structure and even culture).

👉 What else: Following this review, the Treasurer warned that the current RBA doesn't have sufficient expertise for making all the decisions - so now, he has made a recommendation to separate the monetary policy board from the governance board.

What's the key learning?

💡For such significant decisions, it’s important that too much power isn’t in too few hands. While the RBA board is currently 9 members, much of the current authority sits with the Governor of the RBA.

💡We know that setting and raising interest rates has enormous implications on the Australian public..and economy.

💡This new “dual-board” model will allow RBA Board members to either have roles in the operations of the central bank, or they have roles setting the interest rate. And this would bring Australia in line with other central banks like Bank of Canada and Bank of England.

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