That meeting, apart from deciding on interest rate settings, is also expected to discuss how it tells the public and financial markets about its decisions.
The independent review recommended that the post-meeting statement announcing the cash rate contain an unattributed vote tally. This would reveal if there were members of the committee at odds with the majority position. Presently, decisions are made on a consensus basis.
Hauser, who moved from the Bank of England to take up his position early last year, told a Senate committee last week that the Reserve wanted to be more open about its decision-making processes.
“There is a desire to continue the journey of explaining in more depth the rival economic arguments that underpin a decision, and a desire to increase transparency and accountability … but also a desire not to increase the noise over the signal,” he said.
The Bank of England makes public the individual votes of members of its monetary policy committee. Other central banks release the votes but do not identify which member voted for a particular decision.
Hauser said he thought it was unlikely the Reserve Bank would follow the Bank of England example.
“I think it’s unlikely that a model that extreme is the one that the Reserve Bank board prefers,” he said.
RBA deputy governor Andrew Hauser doesn’t expect the new monetary policy committee to reveal how members vote.Credit: Alex Ellinghausen
But a total vote, showing how many of the nine-member monetary policy committee supported a particular position, is likely to be made public.
Before the committee’s first meeting, it is likely to hold a “policy issues meeting” in mid-March to cover some of the extra analytical material that will ultimately be canvassed when a decision on interest-rate settings is finally made.
The committee also has to decide on another recommendation out of the independent review – holding public engagements, including speeches, by all members on the committee.
Presently, set speeches are restricted to Reserve Bank staff. But the review found the load should be shared among the full committee membership. This would sharply lift the profile of people charged with setting interest rates.
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It would be in stark contrast to when the bank emerged out of the Commonwealth Bank in 1960. Five of the board’s members were knights of the British Empire, all were men and none spoke publicly about its decisions.
The committee also has to decide on how to interact with a separate organisation, the Council of Financial Regulators, which is made up of the Reserve, the federal Treasury, the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority (APRA).
The independent review recommended the council be informed where interest rate settings are “likely to affect, or be affected by, risks to financial stability”.
An updated council charter, plus a memorandum of understanding between APRA and the Reserve Bank, are expected this year that would formalise its structure which is largely unknown outside financial circles.
Another issue the committee will soon canvass is creation of an “expert advisory group” on monetary policy that would increase the number of voices offering opinions on the state of the economy.
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