‘Sometimes what is not said is also noteworthy’: RBA keeps mum on review discussion

‘Sometimes what is not said is also noteworthy’: RBA keeps mum on review discussion


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The Reserve Bank board discussed the results of the institution’s first independent review in almost four decades but did not reveal it had done so to the public.

This masthead can reveal that while the minutes of the bank’s May 2 meeting – at which official interest rates were surprisingly increased to 3.85 per cent – did not mention the Reserve Bank review, there was discussion about it around the temporary boardroom table in Perth.

Minutes of the Reserve Bank board’s most recent meeting failed to mention if it discussed the findings of the first independent review of the institution since the early 1980s.Credit: Dominic Lorrimer

The bank uses the minutes, which are released a fortnight after each meeting, to explain much of the economic discussion and analysis that takes place during monetary policy deliberations. Economists and analysts scrutinise them for insights into the board’s thinking on the direction of interest rates and the economy.

The May 2 minutes show the bank believes the combination of rates, inflation and higher income tax is contributing to a slowdown in household spending that is expected to weigh on economic growth this year and early in 2024.

Traditionally, the minutes do not go into organisational or operational issues.

But the May 2 meeting was the first formal gathering of the Reserve Bank board after the release of the bank review on April 20.

A spokesperson for the RBA confirmed the board had discussed the review at the meeting.

The review made 51 recommendations, many of which the bank itself will have to implement, including a reduction in the number of meetings, an increased focus on economic research, and post-meeting press conferences by the governor. It also backed the creation of a specialist committee to set interest rates, with the governance of the bank left to a separate board.

The bank’s communication came in for severe criticism in the RBA review.

“The RBA should do more to effectively communicate its policy decisions and thinking to the public,” it found.

“While the frequency of speeches and parliamentary appearances have increased, press conferences are infrequent, explanations of policy strategy lack important detail, and there is limited information available about the range of views within the board.”

Nomura senior economist Andrew Ticehurst was one of the first analysts to note the failure of the minutes to acknowledge the RBA review.

“Sometimes what is not said is also noteworthy, and we highlight that the minutes contain no reference to the recently published RBA review, nor its 51 recommendations,” he said in a report.

“This author would be a little surprised if the review did not feature in the board’s discussions, although perhaps with those discussions still in a preliminary stage, and no firm internal conclusions having been made just yet, the board considers it more appropriate to save such communication for a future point.”

The minutes, however, did suggest the bank has picked up on some concerns expressed by the review panel.

For the second consecutive month, the minutes noted that RBA board members “discussed how best to communicate the board’s decision”.

RBA governor Philip Lowe held talks with review panel members on two occasions in mid-March. His seven-year term as governor is due to end in early September, with many analysts not expecting it to be extended.

Capital Economics’ head of Asia-Pacific economist, Marcel Thieliant, said when the review was released that it was looking “increasingly likely that governor Lowe will be replaced when his term ends in September”.

Treasurer Jim Chalmers said at the time he would not turn his mind to Lowe’s appointment or a possible successor until the middle of the year.

“I have said for some time that the right sequence is to release this with the government’s initial views and then to contemplate the governor’s appointment somewhere closer to the middle of the year and that’s my intention,” he said in April.

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