Reserve Bank of Australia

The Reserve Bank of Australia (RBA) is Australia's central bank and the country's authority for issuing Australian banknotes. It was created under the Reserve Bank Act 1959, which separated the central-banking responsibilities of the Commonwealth Bank of Australia from that institution. The RBA began operating in its present form on 14 January 1960. Its statutory objectives are to contribute to the stability of Australia's currency, the maintenance of full employment, and the economic prosperity and welfare of the Australian people. The Bank's most prominent public function is monetary policy. It uses the cash rate and other monetary-policy instruments to influence borrowing costs, demand, inflation and employment. Since the early 1990s, its framework has centered on an inflation target of 2–3 per cent on average over the economic cycle. The target was initially adopted as an operating framework under Governor Bernie Fraser and was subsequently formalised by the Treasurer and Governor in 1996. Monetary-policy decisions are made by the Monetary Policy Board, chaired by the Governor. From 2025, the Board's regular meeting calendar was reduced from 11 meetings a year to eight, scheduled in February, March, May, July, August, September, November and December. The RBA also works to support a resilient financial system. It monitors systemic risks, publishes financial-stability assessments and cooperates with other Australian agencies, including the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission and the Australian Treasury. Prudential supervision of authorised deposit-taking institutions was transferred from the RBA to APRA in 1998, allowing the RBA to focus more clearly on monetary policy, systemic stability and payments infrastructure. Through its Payments System Board, the Bank determines policy for Australia's payments system. Its responsibilities include promoting safety, efficiency and competition, and it has statutory powers to regulate payment systems, set access and security standards, obtain information and facilitate arrangements concerning payment-system risk. The legal reforms of 1998 strengthened settlement finality and reduced the risk that insolvency could unwind payments that had already been processed through the real-time gross settlement system. The RBA provides banking and registry services to the Australian Government and offers selected services to foreign central banks and other official institutions. Its responsibilities also include managing Australia's official reserves, which include foreign-exchange assets and gold. Banknotes are produced by Note Printing Australia, a wholly owned subsidiary, which manufactures Australian currency and selected security products for domestic and overseas markets. The institution is governed by the Reserve Bank Board for monetary and other banking policies and by the Payments System Board for payments policy. The Governor chairs both boards and acts as the principal public representative of the Bank. Governors are appointed by the Treasurer for terms of up to seven years, with the possibility of reappointment. Since 1996, the Governor and senior officials have appeared regularly before the House of Representatives Standing Committee on Economics to explain the Bank's decisions and outlook. The RBA is an independent statutory authority rather than a commercial bank or a listed company. It does not sell ordinary retail banking products to the public. Instead, its institutional offerings consist of monetary-policy decisions, economic and financial analysis, payment-system oversight, banknote issuance, reserve management and government banking services. Michele Bullock became Governor on 18 September 2023, succeeding Philip Lowe and becoming the first woman to hold the position.

Proposals for a national Australian bank developed during the nineteenth century and gained momentum after the banking crisis of 1893, when failures among commercial banks and building societies contributed to a severe economic depression. The Commonwealth Bank was established by the Commonwealth Bank Act 1911 under the Fisher government. Initially it was primarily a government-owned commercial and savings bank, while the Treasury retained responsibility for issuing banknotes under the Australian Notes Act 1910. Nevertheless, the Commonwealth Bank gradually acquired central-banking functions, including responsibility for government debt and monetary management. Australia's monetary arrangements changed substantially during and after the First World War. The country returned to a gold-standard framework in 1925, but the Great Depression placed that system under pressure. The Australian pound was devalued and Australia formally left the gold standard through legislation enacted in 1932. The Commonwealth Bank Act and Banking Act 1945 expanded the authorities' ability to regulate private banks. Herbert Cole Coombs, who became Commonwealth Bank Governor in 1949, favored more flexible monetary management and helped move policy toward greater use of interest rates and open-market operations. The governance of the Commonwealth Bank was revised in 1951, when legislation created a board structure that separated policy oversight from day-to-day administration. Further institutional separation came with the Reserve Bank Act 1959. That Act transferred the Commonwealth Bank's central-banking functions to the newly established Reserve Bank of Australia, which commenced operations on 14 January 1960. The Commonwealth Bank retained commercial banking activities, while the RBA became responsible for monetary policy, currency issuance, reserve management and central banking. During the following decades, the Bank's operating framework evolved with the Australian economy. Government securities moved from administratively priced tap issues toward tender-based issuance, allowing market conditions to determine prices. In 1983, the Australian dollar was floated, alongside a wider program of financial deregulation. These changes reduced direct administrative controls and increased the importance of market prices, interest rates and open-market operations in monetary policy. The RBA adopted inflation targeting in 1993, with a goal of keeping consumer-price inflation between 2 and 3 per cent on average over the cycle. The arrangement was formalised in 1996 through an agreement involving Treasurer Peter Costello and Governor Ian Macfarlane. Although the framework has evolved, the inflation objective has remained the central reference point for monetary-policy communication. A major institutional reorganisation occurred in 1998. Banking supervision was transferred to the newly established Australian Prudential Regulation Authority, while the RBA received a stronger formal role in payments-system policy through the Payments System Board. The Payments System Act 1998 and related settlement legislation gave the Bank powers over payment-system safety, access, competition and efficiency and improved legal certainty for high-value payment settlement. The RBA lowered interest rates to historically low levels during and after the global financial crisis, later maintaining an accommodative stance for much of the 2010s and early 2020s. In May 2022 it began raising the cash rate as inflation accelerated. The tightening cycle became one of the most consequential recent episodes in the Bank's public role because higher mortgage and credit costs affected households, businesses and the national cost-of-living debate. Philip Lowe's term as Governor ended in September 2023, when Michele Bullock became Governor. Her appointment made her the first woman to lead the institution. The Bank subsequently adjusted its monetary-policy process, including a reduction to eight scheduled Board meetings per year beginning in 2025. Today the RBA remains an independent statutory authority with responsibilities spanning monetary policy, financial stability, payments, banknote issuance, official reserves and government banking services.

• 2025

  Monetary-policy schedule reduced to eight meetings

  [6]Monetary-policy schedule reduced to eight meetingsrba.gov.au

  The Monetary Policy Board adopted an eight-meeting annual calendar.

• 2023

  First female Governor takes office

  [5]Michele Bullock appointed Governorministers.treasury.gov.au

  Michele Bullock became Governor on 18 September, the first woman to hold the position.

• 1998

  Payments System Board created

  [2]RBA historyrba.gov.au

  Payments-system policy was placed under a dedicated board and the RBA received expanded statutory responsibilities in payments regulation.

• 1993

  Inflation-targeting framework adopted

  [3]RBA monetary policy frameworkrba.gov.au

  The RBA began operating with a target of 2–3 per cent inflation on average over the economic cycle.

• 1983

  Australian dollar floated

  [2]RBA historyrba.gov.au

  The Australian dollar was floated during a broader period of financial deregulation, changing the environment in which the RBA conducted monetary policy.

• 1960

  RBA begins operations

  [2]RBA historyrba.gov.au

  The Bank commenced its present operations on 14 January 1960 as Australia's central bank and banknote issuer.

• 1959

  Reserve Bank Act passed

  [2]RBA historyrba.gov.au

  Legislation separated central-banking functions from the Commonwealth Bank and established the Reserve Bank of Australia.

• 1911

  Commonwealth Bank established

  [2]RBA historyrba.gov.au

  The Commonwealth Bank was created as a government-owned bank, laying the institutional foundation from which Australia's central-banking functions later developed.

A legally independent national central bank whose public mandate combines price stability, full employment, financial-system resilience, efficient payments and the welfare of Australians.

• Central-bank policy · 1960

  Monetary policy

  The RBA sets monetary policy primarily through the cash rate and communicates its assessment of inflation, employment, output and financial conditions. Its operating framework is designed to support currency stability and an inflation rate of 2–3 per cent on average over the economic cycle while contributing to full employment and national economic welfare.

• Currency issuance · 1960

  Australian banknotes

  The RBA issues Australia's banknotes and oversees the integrity, supply and security of the national currency. Note Printing Australia, a wholly owned subsidiary, manufactures Australian notes and other security products for domestic and selected international customers.

• Financial infrastructure · 1998

  Payments-system policy

  Through the Payments System Board, the Bank promotes safe, efficient and competitive payment arrangements. Its powers cover payment-system access, risk, security, performance, information gathering and, in relevant circumstances, dispute arbitration.

• Economic research · 1960

  Financial-stability analysis

  The Bank monitors threats to the stability of Australia's financial system and publishes analysis for policymakers, markets and the public. It works with APRA, ASIC, Treasury and other agencies rather than serving as the country's primary prudential supervisor.

• 2025

  Adoption of an eight-meeting monetary-policy calendarStrategy

  Background

  The Bank reviewed its decision-making process and sought more time for comprehensive assessment between policy meetings.

  Action taken

  The Monetary Policy Board moved from 11 scheduled meetings annually to eight, with meetings concentrated across the year.

  Aftermath

  The new schedule aligned the RBA more closely with the meeting frequency used by several other major central banks.

  Source

• 2022

  Beginning of the 2022 monetary tightening cyclePrice change

  Background

  Inflation rose materially after a prolonged period of very low interest rates and pandemic-related economic disruption.

  Action taken

  The RBA raised the cash rate in May 2022, its first rate increase in more than a decade, and continued tightening over subsequent meetings.

  Aftermath

  The decision increased borrowing costs and became a major focus of public debate about inflation, housing and household living expenses.

  Source

• 2025

  Monetary-policy meeting schedule changes[6]Monetary-policy schedule reduced to eight meetingsrba.gov.au

  Other

  The RBA moved to an eight-meeting annual monetary-policy schedule, intended to give the Monetary Policy Board more time to assess economic conditions and align its calendar more closely with international practice.

• 2023

  Michele Bullock appointed Governor[5]Michele Bullock appointed Governorministers.treasury.gov.au

  Leadership change

  The Australian Government announced Michele Bullock as Governor. She took office in September 2023 and became the first woman to lead the RBA.

• 2022

  RBA raises the cash rate for the first time in more than a decade[7]Beginning of the 2022 monetary tightening cyclerba.gov.au

  Pricing · Other

  The Bank began a tightening cycle in May 2022 in response to rising inflation, ending a long period of exceptionally low interest rates. The decision attracted substantial public and political debate because it coincided with a federal election campaign and a cost-of-living squeeze.

1. 1Reserve Bank of Australiaen.wikipedia.org
2. 2RBA historyrba.gov.au
3. 3RBA monetary policy frameworkrba.gov.au
4. 4Governor of the Reserve Bankrba.gov.au
5. 5Michele Bullock appointed Governorministers.treasury.gov.au
6. 6Monetary-policy schedule reduced to eight meetingsrba.gov.au
7. 7Beginning of the 2022 monetary tightening cyclerba.gov.au