Australia’s government will introduce legislation this week to facilitate an planned revamp of the Reserve Bank of Australia, Treasurer Jim Chalmers said in a statement Thursday.
The bill follows an independent review in May which made 51 recommendations for change, some of which require modifications to the RBA’s operating law. So far, there has been general bi-partisan support for the overhaul.
Key changes highlighted by the Treasurer include:
- Mandating that the RBA’s overarching objective is to “promote the economic prosperity and welfare of the people of Australia, both now and into the future”
- Confirming that monetary policy should have the dual objectives of price stability and contributing to full employment
- Repealing the power of the Treasurer to overrule the bank’s monetary policy decisions
The legislation will also contain provisions to establish a governance board to oversee the management of the RBA and clarify the RBA’s responsibility to contribute to the stability of the financial system, Chalmers said.
He added that the government hopes to finalize a new Statement on the Conduct of Monetary Policy next month. One area that is expected to cover, Reserve Bank Governor Michele Bullock said on Wednesday, is whether the RBA should focus specifically on the 2.5% mid-point of its 2-3% inflation goal.