As the Labour Party is seeking a pre election rate cut, Finance Minister Jim Chalmers revealed the government's appointment to the Reserve Board of Australia.

In the major restructuring of the central bank, the Reserve Board of Australia will be divided into two different committees, responsible for interest rate setting and governance respectively. This change occurred at the end of November last year after the Labour Party, Green Party, and independent figures David Pocock and Jacqui Lambie pushed for reforms at the last minute, which led to the passage of 31 bills in the Senate. This reform (a landmark recommendation of the Reserve Bank of Australia's 2023 independent review) will come into effect on March 1st.

Chalmers confirmed on Monday (December 16th) that he has officially appointed former Bendigo Bank CEO Marnie Baker and Australian National University economics professor Ren é e Fry McKibbin as members of the Monetary Committee. These two individuals will join the ranks of current members of the Reserve Board of Australia, Carolyn Hewson, Ian Harper, Iain Ross, and Alison Watkins, who have agreed to serve on the interest rate setting committee.

The Finance Minister also appointed Jennifer Westacott, former CEO of the Australian Business Council, David Thodey, former CEO of Telstra Australia, Danny Gilbert, former chairman of the Australian Business Council, and Swati Dave, former CEO of Australian Export Finance, as members of the Federal Reserve's Governance Committee. They will join the ranks of existing members Carol Schwartz and Elana Rubin, who have agreed to serve as vice chairs and members respectively.

Chalmers stated that he has staggered the terms of newly appointed members and extended the terms of existing members to strike a balance between experience and new perspectives. He also stated that the range of skills possessed by the appointed individuals laid the foundation for the success of the new Australian Federal Reserve Board.

Chalmers told reporters, "I think this is a very good combination." "With the emergence of job vacancies, there will be more opportunities in the future, and we can color the skills matrix as much as possible." "I believe that any objective observer observing the two new appointments to the Monetary Policy Committee or the four new appointments to the Governance Committee would consider these individuals to be the perfect combination of skills and experience

The Alliance Party strongly opposes the reform of the Reserve Bank of Australia, and Shadow Finance Minister Angus Taylor said on Sunday that he is concerned that this move will undermine the independence of the central bank. He claimed that these changes would enable the Labour Party to implement a "lay off and stack" strategy to achieve favorable interest rate resolutions. Taylor said, "I believe that anything other than taking over the existing board and transitioning it to a new board is political." "As I've always said, this is a strategy of 'firing and stacking'. That's the politics of this issue

In November, the Labour Party and the Green Party resumed negotiations on the reform of the Reserve Bank of Australia. The Green Party stated earlier this year that it would support the legislation if the government invoked Article 11 of the Reserve Bank Act to implement interest rate cuts.

The appointment of the Minister of Finance comes at a time when many unions and think tanks allied with the Labour Party are calling for the Reserve Bank of Australia to cut interest rates.

The Australian Council of Trade Unions (ACTU) urged the central bank to cut interest rates the day before the vote to keep rates unchanged. ACTU Secretary Sally McManus stated at the time that the Reserve Bank of Australia failed to understand the difficulties faced by many Australians as high cash rates limited their spending power.

McManus said in a statement, "The central bank is detached from reality and out of place." "Behind the statistics they see are real people who have been hit by refusing to join the rest of the world in starting interest rate cuts." "We are concerned that the central bank is making a serious mistake by maintaining too high for too long

Similarly, the Australian Institute stated that the central bank has the opportunity to provide Australians and the country's sluggish economy with something urgently needed before Christmas. After the Reserve Bank of Australia kept the cash rate unchanged, the bank said, "However, the central bank has once again failed to act. By keeping the rate at 4.35%, the central bank has failed to do the right thing for Australians

Since November 2023, the cash interest rate has remained at a level of 4.35%, with the rate increasing by 0.25% for the first time since May of that year. Previously, the central bank raised the cash interest rate by 4% over a period of one year.

The market currently predicts a 62% chance of the Reserve Bank of Australia cutting interest rates by 0.25% at its next meeting in February next year.