Tweaks to the way the central bank manages its dual mandate of full employment and price stability have been outlined in a refreshed statement on the conduct of monetary policy.
Signed off by the treasurer and RBA governor, the statement is the first update since the Albanese government was elected and also reflects findings from an independent review into the key institution.
The statement specifies the central bank's role in achieving the government's stated objective of "sustained and inclusive full employment", which is "where everyone who wants a job can find one without searching for too long".
"The Reserve Bank board and government agree that the Reserve Bank board's role within this is to focus on achieving sustained full employment, which is the current maximum level of employment that is consistent with low and stable inflation," the statement read.
The definition of full employment was first outlined in the federal government's employment white paper released back in September.
As was suggested in the review into the bank, the board will also commit to regularly communicating how the labour market it functioning in relation to its sustained full employment objective.
They will do this by "drawing on a range of indicators and recognising that full employment is not directly measurable and changes over time."
As expected, the two-three per cent target range for consumer price inflation will remain in place, noting that this approach "supports the anchoring of inflation expectations, while recognising that all outcomes within the target range are consistent with the Reserve Bank board's price stability objective."
"The Reserve Bank board sets monetary policy such that inflation is expected to return to the midpoint of the target," the statement continues
"The appropriate timeframe for this depends on economic circumstances and should, where necessary, balance the price stability and full employment objectives of monetary policy."
Treasurer Jim Chalmers said the statement was part of the government's commitment to maintaining a "world class" central bank.
"This work is part of the Albanese government's broader efforts to reform, renew and refocus the nation's key economic institutions," he said.
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