The Australian Greens say the Reserve Bank needs to be more democratically accountable

The Reserve Bank and the federal government need to jointly deploy inflation policy, using different tools to overcome different outbreaks of inflation, the Australian Greens say.

They say the Albanese government’s review of the Reserve Bank of Australia (RBA) should also confront the limitations of independent central banking as it’s currently perceived.

Senator Nick McKim, the Greens’ treasury spokesman, says the RBA must become more accountable for the consequences of its policies, and it should accept some responsibility for making inequality worse since the 1990s. 

He says current monetary policy arrangements also need to be re-imagined to help Australia confront the climate emergency.

That would include getting the RBA and government to play a more active role in directing the flow of credit to productive ends, particularly the transition to a low-emission economy, and to discourage the flow of credit to speculative ends, particularly highly leveraged property investment, he says.

“This policy would be given effect through prudential regulation and the RBA’s use of its own balance sheet,” he said.

The RBA board and voting decisions

Senator McKim has used his submission to the RBA review to call for a number of changes to the way in which monetary policy is conducted in Australia. 

He said under central bank “independence”, which has existed in Australia since the 1990s, monetary policy had become disconnected from democratic processes.