Christopher Kent: Additional monetary policy tools - reflections and a new framework
Speech by Mr Christopher Kent, Assistant Governor (Financial Markets) of the Reserve Bank of Australia, at the Reserve Bank of Australia, Sydney, 29 June 2026.
On 29 June 2026, Assistant Governor (Financial Markets) of the Reserve Bank of Australia, Mr Christopher Kent, addressed the audience at the Reserve Bank of Australia in Sydney. Kent commenced his speech by paying tribute to the Gadigal People of the Eora Nation, the traditional custodians of the land they were gathered upon, expressing respect to their elders both past and present, and extending that respect to all indigenous peoples present.
In his address, Kent unveiled the new Framework for Additional Monetary Policy Tools at low interest rates, which was published alongside his speech. This framework serves to equip the Monetary Policy Board (MPB) to navigate future scenarios where the cash rate is abnormally low. It incorporates insights from the RBA's own experiences, those of its international counterparts, and the broader academic literature.
It also benefited from the input of three external experts, namely Loretta Mester, Malcolm Edey, and Begoña Domínguez.
The framework essentially provides direction for the MPB and RBA staff when contemplating decisions surrounding additional monetary policy tools. It outlines the design, implementation, and withdrawal procedures for these tools, emphasizing the crucial judgments and choices the MPB would need to make. However, it is important to note that this framework is not a definitive guide due to the unpredictability of future shocks, which are unlikely to mirror past events such as the pandemic or previous overseas crises.
Despite this, Kent reiterated that the cash rate target remains the primary and preferred tool for the RBA in achieving low inflation and full employment. It is well-established and highly effective. The RBA's response to the pandemic, for instance, had the most significant impact in supporting the economy, achieved by lowering the cash rate target to unprecedentedly low levels and maintaining it for an extended period.
While additional tools can offer substantial support during extraordinary circumstances, they introduce complexity and greater risks. Their effectiveness is also uncertain and highly dependent on the specific context and nature of the shock.
Written by urgent.news from BIS Central Bank Speeches's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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