Let’s now talk process. The changes enacted as part of the phase 1 review of the Reserve Bank Act made the processes and principles underlying the Bank’s earlier monetary policy decisions explicit. I mentioned that up until now the Bank had operated with a single decision maker model for monetary policy.
In reality however, successive Governors relied on internal advisory committees consisting of senior members within the ranks to discuss ideas, build consensus and guide decisions on monetary policy.23 The amendment to the Act formalises a Monetary Policy Committee (MPC) consisting of members internal and external to the Bank.24 A committee structure will add further rigour to monetary policy decisions, drawing on the diverse views and perspectives of its members.