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The case for reform of the RBA's policy and communication strategy

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  • Bruce Preston

Abstract

At any time, the public should be able to evaluate whether the Reserve Bank of Australia’s interest rate decisions are consistent with achieving statutory mandates. The current policy and communication strategy makes this difficult. The mandates, as interpreted by the RBA, fail to provide a clearly identifiable performance benchmark. And the supporting communication strategy falls short of a commitment to explain the economic basis of why and how interest-rate decisions achieve mandated objectives. Examples of both concerns are given from various public documents. Basic reforms would improve the accountability and effectiveness of monetary policy.

Suggested Citation

  • Bruce Preston, 2020. "The case for reform of the RBA's policy and communication strategy," CAMA Working Papers 2020-03, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2020-03
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2020-01/3_2020_preston.pdf
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    More about this item

    Keywords

    Monetary policy; central bank communication; transparency; accountability;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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