The 2022–2023 review of the Reserve Bank of Australia, published in March 2023, was a missed opportunity to reconsider the currently dominant framework for monetary policy. This framework, based on strong central bank independence and reliance on adjustments to central bank interest rates to achieve a 2–3% inflation target, has performed poorly at a global level and is no longer sustainable. A new framework, accepting a higher average rate of inflation and taking explicit account of the objectives of full employment and economic prosperity, is needed.
