Speculation about the future of polarising RBA governor Philip Lowe was finally put to bed last week with the announcement that he would not have his term renewed.

His successor will be Michele Bullock, whose appointment was one of a number of changes to the way the central bank would operate going forward.

One of the biggest changes was that board meetings and the following interest rate decisions would happen eight times a year, rather than the current first Tuesday of every month.

So why has this changed and what does it mean for the rest of us?

Sweeping changes

The RBA’s new look meetings will now be conducted over two days, beginning on the Monday and going through to the Tuesday afternoon announcement. Meetings will be held on the first Tuesdays of February, May, August and November with the dates for the other four meetings in between yet to be determined.

All board members will be able to attend internal meetings prior to the board meetings where they can ask questions and gather information from a broader range of staff. The traditional governor’s statements after meetings will now be released by the board as a unit and Ms Bullock will front a press conference immediately afterwards to explain decisions.

These changes are largely designed to invite more input from a broader range of qualified experts and provide more breathing room between decisions so the effects and consequences have more time to be assessed.

Outgoing Governor Lowe said, when announcing the changes, “the less frequent and longer meetings will provide more time for the board to examine issues in detail and have deeper discussions on monetary policy strategy, alternative policy options and risks…staff will have more time for analysis…the post-meeting media conferences will provide a timely opportunity to explain the board’s decision and answer questions.”

What will this mean for interest rates?

The biggest factor for interest rates will be that more time is taken to come to a decision on whether to move them, and the extended time until the following meeting will also be taken into account with the decision.

So, where the RBA might currently make a 50/50 call with the comfort of knowing it’s just a month until they can correct it if it’s the wrong call, going forward there will be a bit more at stake…which means the extra time and diligence taken to come to the decision will be a welcome aspect.

The other consideration is that they may move by more than they otherwise would. If the RBA wants to raise rates but aren’t sure if they are doing enough to tame inflation, they might opt for a 50 or 75 basis point rise instead of the normal 25 points.

However, the RBA will retain the power to call extraordinary meetings outside of the eight scheduled, so they can still deal with urgent issues that arise if necessary.

Day to day stability

Will the changes make things better for borrowers? Time may tell, but the reforms are designed to improve the RBA’s chances of getting their decisions right, so if it were the thought that counts, they are on the right track.

The immediate bonus is that borrowers are less likely to be subjected to some of the speculation that proved so problematic with Governor Lowe.

His comments that rates were unlikely to rise from 0.1% until at least 2024 caused a lot of people to claim they made poorly informed borrowing decisions that have translated to major pain being felt now. And it may be that with more time between meetings, Governor Bullock will not feel compelled to use language as a tool to affect economic conditions.

The fewer rate decisions should also allow borrowers the chance to take a breath and make more measured decisions about their own household budgets. If the RBA hikes or lowers rates, households will have more time to adjust their budgets accordingly and draw out the effects on their finances.