The People Behind the Curtain
You know central banks set interest rates. But who makes these decisions? Who sits at the table? How are they chosen? Do they represent ordinary families?
A 0.25% rate change sounds tiny, but across millions of mortgages it moves billions of dollars.
The RBA Board
Nine members: the Governor (Michele Bullock), Deputy Governor, Treasury Secretary, and six external members appointed by the Treasurer. They are not elected. They serve 5-year terms. Meetings are behind closed doors.
The Revolving Door
Board members often come from — and return to — the financial institutions they regulate. In the US, the Federal Reserve is actually owned by its member banks.
Who Wins, Who Loses?
When the RBA raises rates:
- Banks profit more (wider margins)
- Savers earn more
- Borrowers pay more
- Workers may lose jobs
The decision-makers are rarely the people most affected.
Tonight's Question
"If you were on the RBA board: raise rates (hurts mortgage holders, slows inflation) or hold (keeps prices rising, keeps payments stable)?"
There's no easy answer. That's the point.
RBA Board Simulation
Each person takes a role: Governor, Bank CEO, Young Renter, Retired Saver, Small Business Owner, Parent with Mortgage.
Scenario: "Inflation 5%, unemployment 4%, house prices falling, cash rate 4%." Each person argues their case. Vote. Discuss whose interests won.
Go Further
- Read the 2023 RBA Review (Mulino Review) at treasury.gov.au.
- Research current RBA board members — what are their backgrounds?
- History: Paul Volcker raised US rates to 20% in 1981. Hero or villain?
What We Simplified
- The Fed's ownership is complex — member banks hold shares but don't control it like shareholders control a company.
- Most central bankers genuinely try to serve the public interest.
- Countries without independent central banks (Zimbabwe, Venezuela) suffered hyperinflation.
Want to track progress and save lessons?
Create a free family account. No credit card, no catch — just a place to keep track of what your family is learning.
Create Free Account