RBA shake-up will come as a shock to the veterans, but Lowe’s changes are way overdue

RBA governor Philip Lowe speaks during the Economic Society of Australia lunch held in Brisbane. Picture: NCA NewsWire / Tertius Pickard

It looked very much like Philip Lowe’s last dance in Brisvegas, as the career public servant sketched a central bank future he won’t play a key part in and defended a recent past that won’t be forgotten or forgiven by many in the community.

But the Reserve Bank chief did not give an inch, as he challenged the political class and business to back Australia by investing in our productive capacity and the homes, roads, rail, factories, energy generators and social services needed to raise our living standards.

He did not step back, either, on the tough line about ridding the country of the scourge of high inflation or the threat that wages growth not linked to productivity presents in keeping prices growth at large.

The other business in the Queensland capital was to provide an outline of the RBA’s policy response to the expert panel’s full body scan of the health vitals and prospects for central banking in this country.

As a package, the changes outlined by Lowe may come as a shock to RBA veterans, policy engaged economists, market participants and commentators.

From next year, it will feel like a new world of monetary policy for them, but the broader reality is likely to be a little more prosaic, if not serene, as rate pressures subside.

The changes as presented are necessary and sensible, especially trying to enhance accountability and better communicating the RBA’s thinking and actions after its performance fell short of its previous lofty standards.

The central bank aint broke, but politics, community feeling and the challenges of modern policymaking mean a refresh was overdue.

“As times change, we too need to change,” Lowe told his congregation of economists.

“The world we face is increasingly complex and it is right to re-examine how we make and communicate monetary policy decisions and how the RBA is managed.”

There will be more explaining, more voices in the public square with authority to speak about RBA core business, and sundry outside “experts” sticking their nose into boardroom deliberations.

Central banking is arcane and involves a lot more than the setting of the price of money, but it is that function that dominates the headspace and welfare of Australians.

Community trust is everything, and right now the RBA has a diminished reputation, only partly due to its brutal assault on borrowers from a dozen cash-rate hikes to quell damaging inflation.

Lowe is confident the tide will turn, as the changes “will enhance our decision-making and our communication and will help us be the open and dynamic organisation that we aspire to be”.

That’s a counteroffensive “our” and “us” and “we”at this precarious moment for him, but it reflects a lifetime of service.

Hopefully, change will equal reform and superior outcomes in an era that will soon have a new official at the very top.