CAMA RBA Shadow Board
Monetary policymaking is imperfect. When a central bank sets the appropriate target cash rate each month, there is considerable approximation implied. The imprecision stems from the uncertainties in real-time measurements, latent variables, the type of model, model parameters and the inherently unpredictable nature of the macroeconomy. Whatever rate the central bank sets, there is considerable probability that a different rate would be more appropriate.
Nevertheless, most central banks provide little quantifiable information on the uncertainty confronting policymakers. Conventional central bank communication of interest rate setting does not formalize risk considerations, and the probability of extreme events. The probability that the interest rate should be substantially different from the "most preferred" target rate receives little attention. Central banks currently record formally neither the uncertainty experienced by individual board members, nor by the board as a whole.
The aim of the CAMA RBA Shadow Board is to resolve two outstanding issues:
- Can an individual monetary policy decision-maker quantify her (his) uncertainty about the appropriate target cash rate?
- Can the risks envisaged by individual decision-makers be aggregated to give a collective view about the appropriate cash rate?
We emphasize that the shadow board is not aimed at the prediction of RBA Board behaviour. In common with shadowing exercises in other countries (e.g. the US Shadow Open Market Committee), this is a normative exercise in control, not forecasting.
The shadow board has been running this project since August 2011, and a distinguished team of macroeconomists has been assembled to participate in the study as shadow board members. The CAMA RBA Shadow Board, consisting of nine voting members and one non-voting chair, all distinguished macroeconomists, offers its own policy recommendation on the Monday before the official RBA decision. Members give probabilistic assessments of the appropriate target rate for each round, which are then aggregated. The higher the percentage attached to a given cash rate, the greater the confidence that this rate is the appropriate target. This decision is highly significant for the wider economy and is therefore closely monitored by the financial markets.
In 2026, the Board of the Reserve Bank of Australia (RBA) meets to decide on a target for the cash rate on the following dates:
• 3 February 2026
• 17 March 2026
• 5 May 2026
• 16 June 2026
• 11 August 2026
• 29 September 2026
• 3 November 2026
• 8 December 2026
For questions regarding the CAMA RBA Shadow Board, please contact Timo Henckel. If you wish to access the database of past voting records for research purposes, please contact cama.admin@anu.edu.au.
