This book has emerged from my earlier work on the politics of economic policy in Australia, in which I learnt that the Reserve Bank of Australia, especially since financial market deregulation in the 1980s, had become one of the most powerful and significant policy institutions in the country. Yet it had received surprisingly little attention from researchers, and there were few studies of the politics of central banking and monetary policy in Australia.

Central banks now have a great deal of clout in macroeconomic policy. They essentially control monetary policy, which, these days, means controlling the price of money in short-term markets. They also stand at a critical interface between states and financial markets, and between governments and voters. The ways in which central banks operate and manoeuvre in these settings offer rich pickings for political analysis.

There are two main stories in this book. One is about the politics of monetary policy since financial deregulation in the early 1980s – the period in which the Reserve Bank rose to prominence, crunched inflation in the early 1990s recession, and has since presided over an economy featuring low inflation and relatively strong growth. How and why did this pattern of policy emerge? The second story is about the increasing independence of Australia's central bank. How and why did governments pass so much authority to the RBA, and how can such an outcome be justified in a democracy?