RBA Monetary Policy Board

The **RBA Monetary Policy Board** is the statutory decision-making body of the Reserve Bank of Australia responsible for determining Australian monetary policy. It sets policy to contribute to price stability and full employment, including decisions on the cash rate, within a framework agreed between the RBA and the Australian Government.^[1]

Overview

The RBA Monetary Policy Board is one of the principal boards of the Reserve Bank of Australia (RBA), Australia’s central bank. It replaced the former monetary-policy role of the Reserve Bank Board from 1 March 2025, following reforms to the Reserve Bank Act 1959. The RBA describes the former Reserve Bank Board as having been the RBA’s monetary policy board until 28 February 2025, after which the Monetary Policy Board became the dedicated body for this function.^[1]

The Board’s central task is to determine the monetary policy of the RBA in a way that it considers best contributes to both price stability and the maintenance of full employment in Australia.^[1] In practical terms, this includes deciding the target for the cash rate, which is the overnight money-market interest rate that anchors a broad range of short-term and variable interest rates in the Australian financial system. Changes in the cash rate are transmitted through bank funding costs, deposit and lending rates, asset prices, the Australian dollar, household and business expectations, and broader financial conditions.

The Board’s decisions are significant for Australian households, businesses, financial institutions, and governments. Mortgage rates, savings rates, business borrowing costs, bond yields, exchange rates, equity-market valuations, and inflation expectations may all respond to actual or expected monetary policy decisions. Because Australia’s banking system is highly exposed to variable-rate or relatively short-reset housing loans, decisions of the Monetary Policy Board can affect household cash flows relatively quickly compared with some economies where fixed-rate mortgages dominate.

Legal basis and creation

The Board’s role, responsibilities and composition are set out in the Reserve Bank Act 1959.^[1] The RBA’s overarching statutory objective, as described by the Bank, is to promote the economic prosperity and welfare of the Australian people, both now and into the future.^[1] The Act assigns specific monetary-policy functions to the Monetary Policy Board, including the determination of monetary policy and the RBA’s related policy positions.^[1]

The Monetary Policy Board was introduced as part of a broader institutional reform program following the 2023 Review of the Reserve Bank of Australia. The Review recommended a clearer separation between monetary policy decision-making and the governance of the central bank as an institution. Its final report recommended a dedicated monetary policy board and a separate governance board, reflecting the view that decisions about interest rates and macroeconomic stabilisation require specialised expertise and a distinct institutional focus.^[9]

The new structure created a dedicated body for monetary policy while leaving other RBA functions, such as corporate governance, organisational oversight and payments-system responsibilities, to separate arrangements. The Payments System Board continues to have responsibilities in payments regulation, while the RBA’s governance arrangements sit alongside the monetary policy function.

Mandate

The Monetary Policy Board’s mandate is framed around price stability and full employment. The RBA states that the Board determines monetary policy in the manner it believes best contributes to both objectives.^[1] This places Australia’s central-bank mandate in a dual-objective framework, comparable in broad structure to mandates used by some other central banks, although the legal wording, institutional design and inflation target differ by jurisdiction.

The Statement on the Conduct of Monetary Policy records the common understanding between the RBA Board and the Australian Government about the monetary policy framework. The 2023 Statement describes Australia’s flexible inflation-targeting framework and states that the appropriate timeframe for returning inflation to target depends on economic circumstances and should, where necessary, balance the price-stability and full-employment objectives.^[4]

Australia’s inflation objective is expressed as consumer price inflation of 2–3 per cent over time. The RBA states that this framework has been the practical expression of its objectives since the early 1990s, while also balancing the employment objective.^[5] The Statement on the Conduct of Monetary Policy also records that when inflation is expected to be significantly away from the midpoint of the 2–3 per cent target, or labour-market conditions are expected to deviate significantly from those consistent with full employment, the Board should communicate how long it expects it will take to meet each objective and why.^[4]

Unlike inflation, full employment is not defined by a fixed numerical target. The RBA explains that the full-employment objective is met by focusing on the current maximum level of employment consistent with low and stable inflation.^[5] This means the Board’s assessment of full employment depends on changing evidence about labour supply, wages, productivity, vacancies, participation, underemployment, unemployment and inflationary pressure.

Membership and appointment

The Monetary Policy Board comprises nine members: the RBA Governor, the Deputy Governor, the Secretary to the Treasury, and six non-executive members appointed by the Treasurer.^[1] The Governor serves as Chair and the Deputy Governor serves as Deputy Chair.^[1] The structure combines internal central-bank leadership, a senior Treasury official and external members intended to bring broader economic, financial, labour-market and institutional perspectives to monetary policy deliberations.

The RBA states that the Governor and Deputy Governor are appointed for terms of up to seven years and are eligible for reappointment. Non-executive members are appointed for terms of up to five years, with possible extension up to a maximum total period of seven years.^[1] The Secretary to the Treasury participates as an ex officio member by virtue of that public office.^[2]

As of the RBA’s statutory appointments listing available in October 2026, the ex officio members were Michele Bullock as Chair, Andrew Hauser as Deputy Chair, and Jenny Wilkinson as Secretary to the Department of the Treasury. The listed non-executive members were Marnie Baker, Melinda Cilento, Renée Fry-McKibbin, Carolyn Hewson, Bruce Preston and Iain Ross.^[2] Their terms have different end dates, which staggers turnover and reduces the likelihood that all external members change at the same time.^[2]

The Reserve Bank Act also contains eligibility restrictions. The RBA states that, under section 25AB(2), members of the Monetary Policy Board may not be a director, officer or employee of an authorised deposit-taking institution for the purposes of the Banking Act 1959.^[1] This restriction is intended to limit direct conflicts involving banks and other deposit-taking institutions that are affected by monetary policy and by the central bank’s financial-market operations.

Meetings and communications

The Monetary Policy Board normally meets over two days, beginning on a Monday afternoon and concluding the following day. The RBA states that the outcome of the meeting is announced at 2:30 pm on the second day, and that the Governor holds a media conference after each Board meeting to explain the decision.^[1]

This communication framework is part of the RBA’s broader accountability arrangements. Policy decisions are typically accompanied by a statement explaining the Board’s assessment of inflation, labour-market conditions, output growth, global developments, financial conditions and risks to the outlook. The Bank also publishes minutes of monetary policy meetings. For example, the minutes of the 29–30 September 2025 meeting listed the members participating, senior RBA officials attending, and the topics considered, including financial conditions and the economic outlook.^[3]

The RBA’s Monetary Policy Board Charter states that the Board will agree with the Government and publish a Statement on the Conduct of Monetary Policy from time to time, recording their common understanding of key aspects of Australia’s monetary and central-banking policy framework.^[6] The Charter also sets out governance expectations, including the treatment of material personal interests in relation to matters considered at Board meetings.^[6]

Public communication is important because monetary policy works partly through expectations. If households, firms and financial markets understand how the Board is likely to react to inflation, employment and growth data, changes in expectations can influence spending, saving, wage-setting, pricing and financial-market behaviour before or between cash-rate decisions.

Relationship with the Reserve Bank of Australia

The Monetary Policy Board is part of the Reserve Bank of Australia, not a separate central bank. The RBA remains the institution that issues Australia’s banknotes, conducts market operations, manages liquidity in the banking system, acts as banker to the Australian Government, contributes to financial stability analysis and performs other central-banking functions. The Monetary Policy Board is the body within that institution responsible for monetary policy decisions.

The Board relies on RBA staff analysis and operational capacity. Staff prepare forecasts, financial-market assessments, international comparisons, research papers, briefing material and policy options. The minutes of RBA meetings show participation by senior officials such as assistant governors and heads of departments, who provide analysis to support the Board’s deliberations.^[3]

Implementation of the Board’s decisions is carried out by the RBA through financial-market operations. When the Board sets the cash rate target, the Bank’s domestic markets operations are used to influence conditions in the overnight cash market so that the actual cash rate trades close to the target. These operations link the Board’s policy decision to the broader structure of short-term interest rates.

Monetary policy instruments

The main instrument associated with the Monetary Policy Board is the cash rate target. The cash rate is the interest rate on unsecured overnight loans between banks in the domestic money market, and it is the operational anchor for Australian monetary policy. Decisions about the cash rate influence the broader yield curve, including bank bill rates such as the bank bill swap rate, government bond yields and private-sector lending rates.

The RBA may also use other instruments in exceptional circumstances. During the COVID-19 period, before the creation of the Monetary Policy Board, the RBA used additional tools such as government bond purchases and yield-targeting measures. Later Board discussions have referred to the treatment of the RBA’s government bond holdings. The minutes of the 12 August 2025 Monetary Policy Board meeting stated that members returned to an earlier discussion on whether to increase the pace at which RBA government bond holdings were running down, and noted the existing approach of holding to maturity bonds purchased during the pandemic.^[8]

Although interest-rate decisions receive the most public attention, the Board’s policy stance can also be affected by the size and composition of the RBA’s balance sheet, liquidity-management arrangements and communication about future risks. However, the central published decision remains the cash rate target and the explanation of the Board’s reasoning.

Accountability and independence

The RBA states that the Monetary Policy Board makes monetary policy decisions independently of the political process and does not accept instruction from the government of the day on monetary policy.^[5] At the same time, the Board operates within a statutory framework set by Parliament and within a monetary policy framework agreed with the elected government through the Statement on the Conduct of Monetary Policy.^[4]

This combination of instrument independence and public accountability is common in central banking. Independence is intended to support credible inflation control by reducing the risk that short-term political considerations dominate monetary decisions. Accountability is provided through legislation, public statements, minutes, parliamentary appearances, published forecasts, speeches, reviews and the Statement on the Conduct of Monetary Policy.

The presence of the Secretary to the Treasury as an ex officio member creates an institutional link between monetary policy and the fiscal authority, while the Board remains responsible for monetary policy decisions. The broader Australian financial regulatory framework also includes bodies such as Australian Treasury, Australian Prudential Regulation Authority, Australian Securities and Investments Commission and the Council of Financial Regulators.

Comparison with the former Reserve Bank Board

Before 1 March 2025, monetary policy decisions were made by the Reserve Bank Board. The new Monetary Policy Board inherited that policy role but was designed as a dedicated monetary-policy body. The change reflected reform proposals that sought a clearer distinction between the governance of the RBA as an organisation and the specialised task of setting monetary policy.^[9]

The former Reserve Bank Board combined monetary policy responsibilities with broader oversight functions. Under the reformed model, monetary policy is separated from general governance, while payments-system policy continues to be handled through the Payments System Board. The change is institutional rather than a change to Australia’s currency or the basic use of the cash rate as the core policy instrument.

The creation of the Monetary Policy Board also aligned with changes in communication practices, including scheduled post-meeting media conferences and a greater emphasis on explaining the balance between inflation and employment objectives. The RBA’s published material indicates that meeting outcomes are announced at a fixed time and followed by a Governor’s media conference.^[1]

Significance for financial markets

Financial markets closely monitor the Monetary Policy Board because interest-rate expectations affect prices across asset classes. Australian Government Securities yields, interest-rate futures, bank bills, swaps, listed equities, the S&P/ASX 200 Index, the Australian dollar and bank funding markets can all move in response to policy decisions, minutes, speeches and inflation or labour-market data that alter expectations of future decisions.

Commercial banks such as Commonwealth Bank of Australia, Westpac Banking Corporation and National Australia Bank incorporate the cash rate and expectations of future cash-rate changes into pricing for deposits, mortgages, business lending and wholesale funding. Superannuation funds, including AustralianSuper, are affected through bond valuations, equity-market pricing, currency movements and macroeconomic conditions.

The Board’s importance is therefore not limited to central-bank operations. Its decisions shape the financial conditions under which Australian households save and borrow, businesses invest and hire, governments issue debt, and investors allocate capital across cash, bonds, property, equities and foreign exchange.