Signal or Noise: Why the RBA’s May rate hike was the right decision

Before the COVID-19 pandemic, the Reserve Bank of Australia was considered one of the leading lights in the global central banking circuit. For a large part of the last 30 years, inflation has been within the Bank's 2-3% target and the broader economy has not been in a technical recession once thanks in large part to strong monetary policy settings. 

When the pandemic arrived, the cash rate was just 0.75%. It was quickly cut to 0.1% and Governor Philip Lowe strenuously argued that the nominal interest rate would not be taken below zero (unlike in Japan or Europe). 

What happened afterwards is a series of undoubted mistakes - forward guidance, yield curve control, a lack of consistent communication chief among them. The combined frustration from investors, economists, and the general public has thrust the RBA's credibility into a spotlight it never wanted to have. 

Now, 30 years on since its last major operational review, Australia's central bank will likely have to contend with some humongous changes. Among them - fewer meetings, a crystallised inflation target, and a separate monetary policy board. 

And all this before we find out if the Governor gets to keep his job for a supplementary three-year term. 

To discuss the Reserve Bank Review and what it means for investors, Livewire's Signal or Noise is back with an all-new episode. Joining moderator Hans Lee and permanent panellist Diana Mousina of AMP are:

• Kerry Craig, global markets strategist at J.P.Morgan Asset Management
• Warren Hogan, chief economics advisor to Judo Bank

Note: This episode was taped on Wednesday 3 May 2023.