Reserve Bank of Australia (RBA) Governor Michele Bullock has affirmed the central bank’s independence, stating it will not dictate fiscal policy to the government. This declaration came during a recent media conference where she was questioned about strategies to tackle inflation. Bullock emphasised that the RBA focuses on managing aggregate demand, encompassing both public and private sectors, which currently strains growth limits and contributes to inflationary pressures.
Bullock acknowledged Treasurer Jim Chalmers’ stated focus on addressing inflation as his top priority. However, she clarified the relationship between the RBA and the government, stating, “The idea that somehow we work hand-in-glove is not the way these things work. We are independent. They are independent. We work with what we have got.”
The Reserve Bank of Australia is the nation’s central bank. Its role includes issuing the nation’s currency, setting the official cash rate, and working to maintain full employment and price stability. Bullock’s comments underscore the RBA’s commitment to its independent role in managing monetary policy, separate from the government’s fiscal responsibilities.
This stance reflects the established framework where monetary and fiscal policies operate distinctly. Each entity independently addresses economic challenges using its respective tools, aiming for overall economic stability and sustainable growth.
