The Reserve Bank has been urged to learn from its forecasting and communications errors made during the pandemic to avoid the same mistakes in future.
A parliamentary committee has called on the central bank to learn from its controversial forward guidance issued during the pandemic that implied, with caveats attached, that interest rates would not start rising until 2024.
Despite this guidance, the bank has been lifting interest rates aggressively since May in a bid to bring down elevated inflation.
While recognising there were several inflationary drivers the RBA could not have foreseen, such as the war in Ukraine, the standing committee on economics expects the RBA to "closely examine lessons learnt from its approach to forecasting, its use of modelling, and its approach to communication".
"Australian households, workers and industries - facing intensifying cost-of-living pressures and challenging work and business conditions - deserve no less," the report from the inquiry concluded.
The RBA has already conducted an internal review of its forward guidance measures adopted during the pandemic and admitted attaching dates to future interest rate movement forecasts may have been too prescriptive.
The central bank is also the subject of a wide-ranging review by three independent experts from Australia and overseas.
Committee chair Daniel Mulino said the committee's scrutiny of the central bank had taken place at an unprecedented time.
"The domestic and global environment had changed rapidly since the last hearing in February. International pressures, including the war in Ukraine, a recovery in local demand as we came out of pandemic lockdowns, and supply-side constraints all combined to push inflation to its highest rate since 1990," Dr Mulino said.
The parliamentary committee also called on the RBA to better understand the cohorts driving inflation as well as those groups hit hardest by interest rate decisions.
