New Economist Joins Reserve Bank Board

Professor Bruce Preston has been appointed to the Reserve Bank of Australia Board. He is a well-known expert on economics and will help make decisions about interest rates. This change helps the bank have more people with strong knowledge of money and the economy.
By Newsroom | Business, Australia |

Bruce Preston, a noted academic economist with a focus on monetary policy, has been appointed to the Reserve Bank of Australia (RBA) Board. The appointment, announced by Treasurer Jim Chalmers, signals a continuation of efforts to bolster the central bank's economic expertise. Preston's tenure is set to commence on March 1.

The RBA Board plays a crucial role in setting monetary policy, a function that directly influences interest rates and the broader economy. Preston's arrival marks one of two significant changes to the RBA's leadership overseen by Chalmers this year, reflecting a broader plan to reshape the bank's structure and increase its academic representation. The inclusion of Preston, a professor of economics at the University of New South Wales (UNSW), means that eight out of the nine members of the interest rate-setting committee now possess formal economics training. This appointment follows that of macro-economist Renée Fry-McKibbin, also an academic, to the board.

Deepening Expertise on the Monetary Policy Board

The RBA Board's composition has seen a deliberate shift towards enhancing its economic acumen. Professor Preston's appointment is a key element of this strategy.

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  • Academic Rigor: Preston, with a career spanning three decades, has written extensively on monetary policy, economic theory, and central banking. His academic work has often centered on the role of central banks in managing inflation expectations.

  • Previous Roles: He has previously held positions at Monash and Melbourne Universities, and has been an official at both the Treasury and the RBA itself, bringing a diverse background to the board.

  • Broad Influence: His research has touched upon areas such as macroeconomics, monetary policy, and payment systems, with a PhD focused on the monetary policy implications of climate change.

Past Views on Interest Rates and Communication

Preston's previous writings indicate a perspective that has, at times, favored a more assertive approach to monetary policy.

  • Interest Rate Stance: Reports suggest Preston has previously argued for higher interest rates. This perspective could suggest a predisposition towards tighter monetary policy when economic conditions warrant.

  • Communication Strategy: Furthermore, he has been identified as an economist who has advocated for the RBA to improve its communication regarding interest rate decisions. This implies a belief in the importance of clear public explanation for policy actions.

RBA Board Appointments and Structure

The RBA's statutory appointments are governed by the Reserve Bank Act 1959. The Monetary Policy Board, which sets interest rates, comprises several ex-officio members and other appointed members.

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  • Monetary Policy Board Members: Key figures include Governor Michele Bullock, Deputy Governor, and the Secretary to the Department of the Treasury, Jenny Wilkinson. Other members include Marnie Baker AM, Renée Fry-McKibbin, Carolyn Hewson AO, and Alison Watkins AM.

  • New Board Structures: Treasurer Chalmers has been overseeing changes to the RBA's boards, with a recent announcement indicating women are in the majority on both the Monetary Policy Board and the Governance Board. These new structures began on March 1.

  • Consultation: The appointment of Professor Preston involved consultation with Ted O'Brien, the Shadow Treasurer.

Expert Background and Academic Standing

Professor Preston's academic credentials and research interests are well-established within the economics community.

  • Education: He holds a PhD in Economics from Princeton University, following a BA from Harvard University.

  • Research Focus: His research has consistently explored monetary and financial economics, with notable publications on topics including the "Great Moderation," monetary policy, and payment systems.

  • Institutional Affiliations: Beyond his current role at UNSW, his academic journey includes affiliations with other leading universities and research institutions such as the National Bureau of Economic Research (NBER).

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Professor Bruce Preston's appointment to the RBA Board adds significant academic and practical experience in monetary policy to the central bank's interest rate-setting committee. His past arguments for higher interest rates and improved communication by the RBA provide context for his potential contributions to future policy discussions.

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Frequently Asked Questions

Q: Who is Bruce Preston?
Bruce Preston is a professor who studies economics. He has a lot of experience and knowledge about how money and the economy work.
Q: What is the Reserve Bank of Australia Board?
This is the group that decides important things about Australia's money, like setting interest rates. These decisions affect how much it costs to borrow money and how the economy grows.
Q: Why is this appointment important?
It means the board has more experts who understand economics. This can help the bank make better decisions for the country's money situation.
Q: What did Bruce Preston think about interest rates before?
Some reports say he thought interest rates should sometimes be higher. He also thought the bank should explain its decisions more clearly to people.