Australian Central Bank Reforms Stall Amid Greens’ Demand for Rate Cuts, Reports Reuters

SYDNEY (Reuters) – Efforts to reform the Reserve Bank of Australia (RBA), which have been delayed for an extended period, encountered another hurdle on Monday. Greens lawmakers have insisted that the Labor government must implement a reduction in interest rates in exchange for their backing of the proposed legislation.

In a statement, the Greens made it clear that they would not support Labor’s RBA reforms unless interest rates were lowered. "The Reserve Bank should lower interest rates immediately, and if they do not, the Treasurer should utilize his existing powers to reduce rates and alleviate the financial burden on mortgage holders," the party stated.

The RBA is set to announce its next policy decision on Tuesday, having maintained interest rates at 4.35% since November. Policymakers have all but dismissed the possibility of a rate cut this year due to persistent inflation, much to the frustration of borrowers.

The reforms, suggested by an independent review conducted last year, propose the establishment of a separate governance board to work alongside the current monetary policy board. The new nine-member board would still have six external members, which the opposition Liberal-National Party claims could allow the ruling Labor Party to appoint individuals sympathetic to its agenda.

Just two weeks prior, the Liberal-National coalition had opposed the proposed reforms, putting Pressure on Treasurer Jim Chalmers to seek support from the Greens or independent lawmakers to push through the changes.

Finance Minister Katy Gallagher described the Greens’ position as "out of control." "We won’t collaborate with that because it’s irrational. It’s economically irresponsible, and we will not proceed in that direction," Gallagher stated in a radio interview.

The ongoing political disputes have left the reform legislation in limbo, maintaining the current structure of the policy-setting board.

Although the RBA has already implemented some recommendations from the review, such as reducing the frequency of policy meetings while extending their duration and conducting press conferences following each meeting, it remains undecided on other recommendations, including the regular public appearances of all board members to share insights on policy discussions.