The next phase of a major shake up to the Reserve Bank of Australia has kicked off with Treasurer Jim Chalmers introducing changes to parliament.
A dual-board set up is one of the major reform items, with the plan to have one for making interest rate decisions and second for overseeing the institution's operations.
Dr Chalmers said the monetary board would be guided by a Statement on the Conduct of Monetary Policy as a supplement to the Reserve Bank Act.
"It will set out the views of the government and the Reserve Bank on important aspects of monetary policy, including the flexible inflation target of two to three per cent," he told parliament on Wednesday.
"This will help improve co-ordination between fiscal monetary and macroprudential policies."
Shadow treasurer Angus Taylor said he was still reviewing the legislation but expressed concern with the process of appointing people to the monetary policy board.
"The appointment process is incredibly important," he said.
"We want to see downward pressure on inflation, it's taking too long and the government's wrong priorities and bad decisions are making it a whole lot harder to get inflation down than it should be."
Following the appointment of Iain Ross and Elana Ruben to the RBA board earlier this year, Mr Taylor said the government failed to follow a merit-based process.
An independent review of the RBA was released in April and called for a range of renovation measures, some of which the institution has already acted on, such as the move to fewer meetings a year.
A power allowing the treasurer to intervene in interest rate decisions is also set to be abolished based on a recommendation from the review.
The veto power, outlined in the RBA Act, has never been used.
Australian Associated Press