RBA´s Lowe: RBA review will assist the central bank in dealing with a complex world

Ross J Burland FXStreet

Comments are seeping through from the Reserve Bank of Australia´s governor Philip Lowe.

He states that the RBA review will assist the central bank in dealing with a complex world and that the RBA board will think about meeting frequency and communication.

The Reserve Bank of Australia says that it welcomes independent review recommendations and the review panel’s support for the current monetary policy framework.

´´The independent review of the Reserve Bank of Australia (RBA) has recommended creating a specialist board to manage monetary policy that would be chaired by the governor and have a dual mandate of price stability and full employment,´´ Reuters reported.

Key notes

´´The central bank should keep its flexible inflation target of 2-3% but aim to return inflation to the mid-point rather than average it over time. Importantly for market confidence, the RBA's Monetary Policy Board (MPB) would retain its independence from government control.´´

´´Treasurer Jim Chalmers has indicated in-principle agreement to all 51 of the recommendations made by the review which he set up last July with an eye to making the RBA "fit for the future".The review recommended the RBA's current single board be split into one for monetary policy and one for governance with an external chair that would oversee operations such as human resources, finance, risk management, and technology.´´

´´The MPB would comprise the governor and deputy governor of the RBA, the Treasury Secretary and six external members with the expertise of open-economy macroeconomics, the financial system, labor markets and the supply side of the economy.´´

´´The review recommended the MPB meet eight times a year, instead of the current 11 meetings, and an unattributable record of voting should be published in the post-meeting statement and minutes should include points of disagreement. External members would be appointed for a term of five years, with the possibility of reappointment for up to one year.´´

´´Members should be expected to discuss the Board's decisions in public from time to time, and statements released after policy meetings should be agreed by them and published in their name, the review said. The review said the RBA should better explain its policy choices through regular press conferences and increase the amount of information available about deliberations, strategy, and its forecasts.´´

´´MPB members should be more accountable for their role in setting monetary policy, the review said. The review recommended the government should legislate the changes to commence from July 1, 2024.´´

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

GBP/USD alternates gains with losses near 1.3550

GBP/USD struggles to maintain the recent bull run and hovers around the 1.3550 zone on Tuesday. Cable’s irresolute price action follows the equally directionless performance of the Greenback, while the disheartening UK jobs data also seem to limit the upside.

EUR/USD climbs to daily highs past 1.1580

EUR/USD keeps the current bullish tone well in place and approaches the 1.1600 region on turnaround Tuesday. Indeed, the pair advances for the fourth day in a row amid the lack of direction in the US Dollar, steady uncertainty in the geopolitical landscape and diminishing bets for further Fed rate hikes.

Gold challenges $4,400 amid modest losses

Gold faces some fresh selling pressure and retreats modestly to the area below the $4,400 mark per troy ounce after two consecutive daily advances. The precious metal’s correction comes in tandem with the absence of direction in the US Dollar, declining US Treasury yields across the curve and continuous uncertainty in the Middle East crisis.

Crypto Today: Bitcoin, Ethereum, XRP falter amid escalating US-Iran tensions

Cryptocurrency prices are broadly correcting on Tuesday, with Bitcoin edging lower toward $64,000. Ethereum shows weakness amid ongoing narrow-range consolidation, while Ripple trades below $1.00, weighed down by falling technical indicators.

Fiscal concerns and doubts on Fed independence send US yields to long-term highs

US Treasury yields keep rising across the curve this week, with the yield for the 30-year Treasury bond reaching its highest level since 2007, during the global financial crisis, at 5.33% so far on Monday. A mix of concerns about the ballooning US fiscal deficit and growing doubts about the Federal Reserve’s Independence are increasing pressure on US Government Bonds.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.