5.1
Recent reports by the House Standing Committee on Economics into the RBA have discussed the impact of the COVID-19 pandemic, and the unprecedented fiscal and monetary responses used to support the economy during that time. However, since the last hearing in February 2022, the environment has changed rapidly, with the Australian economy now battling inflation levels not seen in a generation, due to a combination of domestic and global factors.
5.2
The committee appreciates that several factors influencing inflation could not have been foreseen. It also notes the RBA’s recently released review of forward guidance. However, the committee expects the RBA to continue to closely examine lessons learnt from its approach to forecasting, its use of modelling, and its approach to communication—and to consider how these can be improved. Australian households, workers and industries—facing intensifying cost-of-living pressures and challenging work and business conditions—deserve no less.
5.3
The committee also expects the RBA to comprehensively analyse the socioeconomic and demographic segments from which demand-driven inflation is emanating, and the consequent impact of interest rate adjustments on the specific inflationary consumption behaviour of different cohorts.
5.4
The committee recognises that the RBA has responsibilities beyond monetary policy—such as operating as the government’s main transactional banker and providing banking services to the Australian Taxation Office, Services Australia and many other government departments. This has been critically important in the provision of COVID-related and flood‑related disaster payments in real time—even on weekends and outside of normal business hours. The committee commends the RBA for its efforts here.
5.5
The committee acknowledges that the RBA is undertaking considerable work regarding climate change. It is important that the RBA continues to keep pace with the impacts of climate change and factors these into its future decision-making processes.
5.6
The RBA is also responsible for the core of Australia’s payments system and operates the centre of Australia’s New Payments Platform which enables near real-time payments. The committee acknowledges the importance of a robust and efficient payments system for the day-to-day functioning of the Australian economy, and the RBA’s advocacy for the shift to electronic payments. This is an ongoing area of interest for the committee.
5.7
The committee notes that on 20 July 2022, the Treasurer announced a ‘wide-ranging’ independent review of the RBA and Australia’s monetary policy arrangements, which is scheduled to produce a final report with recommendations to the Australian Government by March 2023. The review is assessing monetary policy arrangements and the RBA’s performance in meeting its objectives, its governance, and its culture. The RBA, to complement this external review, has conducted internal reviews into the three-year yield target, the bond purchase program, and (as mentioned previously) its approach to forward guidance.
5.8
The committee notes the importance of the independent review in the context of the complex and rapidly changing economic environment. The committee looks forward to discussing the outcomes of this review and the RBA’s internal reviews at future hearings.
5.9
The committee will continue to closely scrutinise the RBA’s policy responses to current and emerging threats to the nation’s economy, and ensure the transparency and accountability of the RBA’s decisions.