Strip RBA board of rate-setting power: review | EXCLUSIVE by swrighteconomy
The Reserve Bank board would be stripped of its power to set interest rates and forced to explain why it fails to hit its inflation target, while senior staff would be barred from holding shares or government bonds under sweeping proposals put to the inquiry examining the institution.
“The status quo, in which monetary policy is set by a board mostly composed of corporate leaders with no experience in macroeconomics, has served Australia poorly,” he said. The committee would include five RBA economists plus four outside experts. The votes and reasoning of committee members would be made public after meetings, which would be reduced from 11 to eight a year.
Macroprudential regulations, such as requirements on interest rate buffers or how much of a commercial bank’s lending can flow to housing investors, have been used in recent years to prevent overheating in the housing market which could destabilise the banking sector. “The welfare of the Australian people would be improved by removing financial stability from the RBA’s mandate for monetary policy, leaving it to focus on the dual goals of a low and stable rate of inflation and the maintenance of full employment,” he said.This week, the Australian Greens used its submission to the RBA inquiry to call for the bank to have an objective of maintaining a stable ecology and climate to its objectives.
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