The AFR's rates commentator, David Bassanese, has echoed concerns regularly voiced here (and implicitly rejected by my most formidable adversary, Terry McCrann), opining:
"As a long-time supporter of the current structure of the Reserve Bank board, I have to now admit to a change of heart. It strikes me that, in today’s modern world of finance, the idea of having leading business figures help decide on the future course of interest rates is an anachronism that is well past its use-by date. And increasingly, it is undermining the credibility of and public respect for one of Australia’s most pre-eminent economic institutions. For those that still don’t know, Australia is virtually unique in the world in having leading business figures sit on the decision-making board that sets the level of interest rates each month. The arrangement is a relic of the 1950s and 1960s, when credit conditions were set over cups of tea between RBA officials and leading private banks. Sadly, I doubt any government has the guts to start making necessary changes, but it’s worth pointing out the obvious irregularities in the system."
