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

0:44 - RBA review score out of 5

3:30 - Does the RBA review go far enough?

8:50 - Are two boards better than one?

13:05 - Is this a missed opportunity for more outside expert opinion for the RBA?

13:40 - The RBA's surprise rate hike

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 undoubtedly a series of mistakes - forward guidance, yield curve control, and 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. And all this before we find out if the Governor gets to keep his job for another 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 for Livewire Markets