On April 20, it was announced that the Reserve Bank of Australia (RBA) would undergo its first major shake-up in four decades - and certainly, since it started focusing on inflation in the early 1990s.

Coming after 10 consecutive cash rate rises in 2022 and this year, and with plenty of fists being shaken at RBA governor, Dr Phil Lowe, such changes aren't surprising.

Dr Lowe's assurance that record low interest rates wouldn't change until 2024 also hasn't impressed pandemic buyers about to jump off their fixed-rate mortgage cliff.

But what do these new RBA changes involve and more importantly, will they help everyday people already struggling with cost-of-living pressures including a rental crisis?

Let's take a look.

RBA shake-up: how our central bank currently works

The Sydney Morning Herald explains that the RBA is very different to most central banks with monetary policy set by a board of non-monetary policy experts - an idea first proposed by Great Depression-era Labor Treasurer, Ted Theodore.

"Most central banks have moved to separate monetary policy committees, while the operation of the bank itself is left to the governor or a board of directors similar to a private company," the article noted.

RBA shake-up: why have new changes materialised?

The RBA shake-up announced last week followed an independent review of the central bank, which the Federal Government requested in July 2022.

The review was conducted by Canadian former central banker, Professor Carolyn Wilkins; Australian National University economics professor Renée Fry‑McKibbin; and Federal Secretary for Public Sector Reform, Gordon de Brouwer.

In its 294-page review report - "An RBA fit for the future" - the three-panel board detailed 51 recommendations to the Federal Government.

RBA shake-up: what are the proposed changes?

The change most people are focussing on is the introduction of a specialist monetary policy board (MPB), which will deal exclusively with monetary details, including setting interest rates.

The current RBA board will thus be stripped of all of its monetary power and oversee only its internal governance plus currency issuances and other such tasks.

This will make the RBA very similar to that of comparable central banks around the world especially that of the Bank of England and the Bank of Canada.

And importantly, the new board will feature six external members - to be appointed by the Federal Treasurer - who will have specialist expertise in different monetary areas such as:

• open-economy macroeconomics
• financial system
• labour markets
• the supply side of the economy

This is far removed from the current RBA board which is largely made up of non-monetary policy experts.

Plus, through such expertise, these members will be able to make a significant contribution to monetary decisions, the review report stated.

"By including six external members, the MPB would be weighted in favour of external members," the RBA review stated.

"This would provide a healthy counterbalance to the influence of internal members ... and will bring an independent and informed perspective on monetary policy."

Importantly, the new MPA will also have the power to "robustly challenge" Dr Lowe and future RBA governors, said a Financial Review article.

As well, interest rate calls will be made just eight times - rather than 11 - per year.

However, the specialist MPB will still be chaired by Dr Lowe and feature the deputy governor, Michele Bullock, as well as the Federal Treasury secretary.

RBA shake-up: will the changes help me?

Unfortunately, the introduction of a new MPB and other RBA review recommendations may not help the average person on the street, with a lot of hope riding on the MPB's external members.

Many economic experts are concerned these members may decide to push interest rates higher than the current RBA board - or make similarly unattractive changes.

It's also important to note that the RBA review agreed with the RBA's 2% to 3% inflation target.

The AMP's chief economist Shane Oliver has told SBS that everyday Australians should “not be under any illusions” that the RBA changes will result in lower interest rates.

“The benefit of having a separate committee is if it is comprised of experts is that (this committee) would be in a better position to question the recommendations of the RBA,” he said.

“But whether it would result in different outcomes remains to be seen … it may not result in any change at all … just that a different committee would be involved.”

This line of thought seems to be what most economic experts agree on.

The Wall Street Journal noted the MPB's external members may want to "stomp on inflation more aggressively".

"The so-called experts will probably want to show their inflation-fighting teeth early in order to shore up their credibility with global financial markets," the article noted.

The Australian also noted that external members who run a personal economic consultancy may be "problematic" - while the lack of these members may see these positions "filled by academic economists.

This could result in a committee "more hawkish than one made up of two RBA representatives and outsiders from the business community, taking a more aggressive stance on raising interest rates."

Betashares chief economist David Bassanese is also wary of a large quota of academic economics, saying this could mean a “greater risk policy will be set in an ivory tower, devoid of real-world appreciation of the facts on the ground".

“It’s also far from clear that academic economists, even so-called monetary economists, have any superior ability to form judgments on the correct level of interest rates,” Mr Bassanese told The Australian.

“What Australia least needs are half a dozen self-important monetary academics incessantly squawking in public about what should or should not be done with interest rates.”

RBA shake-up: what happens next?

The RBA review recommends that legislated changes should commence on or after July 1, 2024 "to ensure continuity as the changes are implemented."

Treasurer, Jim Chalmers, said the government agrees "in principle” with all of the review panel's 51 points, and plans to implement them by July 2024.

With the bipartisan support of the Coalition, the Federal Government plans to legislate for the creation of the two new RBA boards - and later, organise appointees - in moves to hopefully be finalised by the middle of 2024.

Meanwhile, a new Statement on the Conduct of Monetary Policy - or Memorandum of Understanding - between the Federal Government and RBA Board will be finalised by the end of 2023, Mr Chalmers said.