A detailed issues paper has been released by the federal government outlining a broad array of investigations, and will examine if existing monetary policy settings are meeting the bank's core objectives of price stabilisation.

"The review of the Reserve Bank of Australia (RBA) is designed to ensure that Australia's monetary policy arrangements and the operations of the Bank continue to support strong macroeconomic outcomes for Australia in a complex and continuously evolving landscape," the terms of reference reads.

The four themes of the review are monetary policy arrangements, performance against the bank's objectives, governance and its role as an institution.

Treasurer Jim Chalmers tasked three independent experts to conduct the review into the central, under the guise to investigate whether the bank is equipped to deal with future economic challenges.

The review has coincided with a high inflationary period which has caused the RBA to hike interest rates faster than its initial forward guidance of an economic bounce back from the pandemic.

Steeper hikes in the cash rate, which now sit at 2.35 per cent, has garnered backlash against the RBA over how it communicates financially sensitive information to the market.

High inflation has mostly been spurred on by COVID-19 supply chain disruptions and commodity price shocks from the Ukrainian conflict.

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The review is also set to scrutinise whether a more flexible inflation targeting system should be in place, particularly when interests are in the lower bounds.

Current policy settings seek to bring inflation within a target range of 2 to 3 per cent. CPI for the second quarter stood at an annual rate of 6.1 per cent.

Treasury and the RBA are forecasting inflation in the December quarter will peak at 7.75 per cent.

"Flexible inflation targeting frameworks, in various permutations, provide one set of options. But others have been suggested," the issues paper reads.

"The panel is mindful that there are limits to what monetary policy can achieve. Monetary policy does not directly set the rate of inflation or employment, and many other outcomes that are outside the central bank's remit or control are important."

The independent panel is also poised to look at the bank's public communication, with a particular emphasis on forwards guidance.

"Effective communication about the economic outlook, direction of policy and risks can help the RBA achieve its monetary policy objectives," it says.

"More broadly, effective communication can improve understanding about how the RBA responds to changes in the economic outlook, including how it manages trade-offs between policy objectives, and this reduces uncertainty for the public and financial market participants."

The panel members consist of the Bank of England's Carolyn Wilkins, economist Renée Fry-McKibbin and Gordon de Brouwer.

A final review is expected to be handed to the Treasurer next year.