Major RBA changes start this week
The Reserve Bank (RBA) is changing how it sets interest rates this year, with the new changes kicking in this week.
The overhaul - announced last year following an independent review of the bank - means the board will meet fewer times during the year, its meetings will be longer and the governor will have to front up to the media to explain the board’s decisions.
Here’s what you need to know ahead of the bank’s first rate call for the year and what it could mean for mortgage holders.
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How often will the RBA board meet?
Starting from February 2024, the RBA board will only meet eight times a year, instead of 11.
The new meeting dates will be
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February 5-6
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March 18-19
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May 6-7
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June 17-18
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August 5-6
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September 23-24
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November 4-5
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December 9-10
You’ll notice that the RBA board won’t be meeting in April, July and October.
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What else is changing?
The RBA board meetings will be longer than they were previously and will span two days. The meetings will start on Monday afternoon and continue on Tuesday morning.
The board’s decision on whether to hike, hold or cut interest rates will then be announced at 2:30pm on Tuesday. This post-meeting statement will come from the board, rather than just the governor.
Governor Michele Bullock will then hold a media conference at 3:30pm to explain the decision to the public.
What does it mean for mortgage holders?
Fewer meetings mean mortgage holders will no longer be faced with back-to-back monthly rate hikes, or rate cuts, and will only have to deal with changes up to eight times per year.
However, some have suggested this could also mean bigger rate movements for mortgage holders when the board does meet.
“Less frequent meetings by the RBA may mean the rate changes could be more drastic each time,” RMIT University research fellow Dr Nataliya Ilyushina noted.
On the flipside, the review has said moving to fewer meetings will give the board more time and data to make informed decisions.
Why are things changing?
The RBA review was the first external review of the central bank and the operation of monetary policy in four decades.
It made 51 recommendations, which were all largely to do with improving transparency and communication.
By having less frequent and longer meetings, the RBA has said it will have more time for deliberation and to discuss strategy, alternative options and risks, as well as how movements are communicated to the public.
