The Reserve Bank of Australia’s (RBA’s) main responsibility is monetary policy. Policy decisions are made by the Reserve Bank Board with the objective of achieving low and stable inflation over the medium term. Other responsibilities include maintaining financial system stability, while at the same time promoting the safety and efficiency of the payments system. The RBA regards appropriate monetary policy as a major factor contributing to the Australian dollar’s stability, which in turn leads to full employment and the economic prosperity for Australia. The Bank is accountable to the Australian Parliament and provides an annual report to them. The Reserve Bank Act 1959 provides the legislative foundation for the RBA’s responsibilities and powers.

The RBA is unique among the central banks — it has two boards with complementary responsibilities. The Reserve Bank Board is responsible for monetary policy and overall financial system stability. The Payments System Board has specific responsibility for the safety and efficiency of the payments system.

RBA’s assets include Australia's holdings of gold and foreign exchange. The Bank is wholly owned by the Australian government, to which its profits accrue. The RBA’s headquarters is in Sydney, with regional offices in Adelaide, Brisbane, Canberra, Melbourne, Perth, London, and New York. Note Printing Australia Limited (NPA) is a wholly owned subsidiary of the Bank and manufactures Australia's currency notes and a range of other security products for domestic and overseas markets.

In 1993, then-Governor Bernie Fraser outlined price stability as a policy objective for the first time. He defined it as a rate of inflation that averaged 2 percent to 3 percent over a period of years. In August 1996, then-Governor-designate, Ian Macfarlane and Australia’s treasurer jointly issued a Statement on the Conduct of Monetary Policy. It essentially reiterated and clarified the respective roles and responsibilities of the RBA and the Australian government in relation to monetary policy and provided formal government endorsement of the RBA's inflation objective, which had been informally in place for some time.

The RBA meets the first week of each month with the exception of January when it takes its summer break. At the conclusion of their December meeting, the RBA announced several changes to their communications policy. Until now, a statement was released only if a policy change was made. Now they will release a statement at the conclusion of every meeting. Another change concerned the timing of the policy announcement. Rather than waiting until the next day, the announcement will occur immediately after the conclusion of the Finally they said that minutes to their meetings would be released two weeks after the meeting.

The Bank’s interest rate was increased to 6.75 percent in November despite the credit crunch and a looming national election. It is 2.25 percent higher than the Federal Reserve and 100 basis points higher than the Bank of England rate of 5.75 percent. Interest rates are 6.25 percent higher than the Bank of Japan’s policy rate of 0.5 percent.