Tuesday 2 August 2022 04:51 AM Former Reserve Bank of Australia research manager Peter Tulip says board lacks ... trends now

The Reserve Bank of Australia keeps making the wrong decisions because 'part-time amateurs' are making calls on interest rates, a former bank insider says.

Borrowers are widely expected to cop another 50 basis point rate increase on Tuesday, adding to the May, June and July increases that have been the steepest since 1994.

This would see someone paying off an average $600,000 mortgage cop a $169 increase in their monthly mortgage repayments, as the cash rate rose from a three-year high of 1.35 per cent to six-year high of 1.85 per cent.

This is occurring despite RBA governor Philip Lowe repeatedly promising last year to keep the cash rate on hold at a record-low of 0.1 per cent until 2024 'at the earliest'. 

Peter Tulip, who was the RBA's senior research manager from 2011 to 2020, said the central bank board, with business leaders, lacked the gravitas to challenge Dr Lowe on flawed decisions.

'Other central banks have monetary policy decisions made by stars of the economics profession - we have them made by part-time amateurs,' he told Daily Mail Australia.

'I was unhappy with the way the Reserve Bank was doing its job, I didn't think it was doing a very good job.' 

Dr Tulip, who is now the chief economist with the Centre for Independent Studies think tank, said the RBA board needs experts at macro-economic measures.

'They don't have the training to say to Phil Lowe, "But hold on, governor, doesn't the research say the opposite to that" or "Why are we doing this when the Bank of England is doing the opposite?" or even "What's the evidence for that?"

'These are the sorts of questions are difficult for people without specialised expertise to ask.' 

One-time Coca-Cola Amatil CEO Alison Watkins was appointed to the RBA board in December 2020 for a five-year term when she was still earning $2,178,652 a year as the head of the soft-drink bottling company.

Ms Watkins was last year paid $45,641 to attend five board meetings plus another $4,982 to sit on the RBA's audit committee.

Ms Watkins was only required to attend fewer than half the RBA's 11 monthly board meetings.

Fellow board member Mark Barnaba, the deputy chair of Fortescue Metals Group, earns a base salary of $1,162,211 - based on a conversion from $US802,799 in the annual report.

As a Reserve Bank board member, he was last year paid $77,620 to attend 11 board meetings plus another $22,430 to chair the RBA's audit committee.

Dr Tulip, who was an economist at the US Federal Reserve, said the American central bank's Board of Governors were academics who were experts on monetary policy.