A long-awaited review into the Reserve Bank of Australia (RBA) has been handed down, with the government supporting the 51 recommendations in principle.
Among them, the board that sets interest rates will be split off from the people who govern the overall running of the bank.
Click the link and listen to the episode below:
On today’s The Briefing, we speak with Jonathan Kearns, an economist who spent three decades at the RBA and was one of the people consulted by the review panel.
Kearns says the RBA is an institution with many responsibilities, and one of the things people are familiar with is setting up the interest rate to control the inflation and keep the unemployment rate “as low as possible”.
There are many different parts to the Reserve Bank operation, and it does a lot of things you don’t really think about. So the currency, the bank notes you have in your wallet, even these are distributed and manufactured by the Reserve Bank,”
Kearns said.
He says another role of the RBA is to determine the interest rate when one bank borrows from another.
That interest rate is set by the Reserve Bank and ends up influencing all other interest rates in the economy, including the interest rate that we all pay on our mortgages,”
he added.
Subscribe to The Briefing, Australia’s fastest-growing news podcast on Listnr today. The Briefing serves up the latest news headlines and a deep dive into a topic affecting you. All in under 20 minutes.