Reserve Bank of Australia chief Philip Lowe said the coronavirus is having a 'significant'effect' on the country's economy
RBC Capital Markets is Royal Bank of Canada's investment division.

The Reserve Bank of Australia (RBA) has prohibited the Royal Bank of Canada (RBC) from participating in confidential briefings, following a leak by a client, who revealed details discussed during a lunch regarding the former's cash rates.

In February, RBA assistant governor Christopher Kent had met with the economists and trading clients of RBC Capital Markets -- the bank's investment division -- after Australia's central bank had decided to retain the cash rate at 4.35%.

One of the clients, who attended the lunch, then shared the cash rate details with an external associate. The associate, who was yet another RBC client, then reached out to the bank's sales division to inquire why they were not included in the private discussion.

Upon learning of the leak, RBC promptly notified the RBA, resulting in a 12-month ban for the bank from confidential briefings, Australian Financial Review reported on Tuesday.

Peter Tulip, chief economist at the Centre for Independent Studies and former RBA official, said it was disappointing when confidential information gets leaked.

"The RBA should talk to a wide range of people," he said. "It's very useful to talk to people in the markets on a confidential basis to see what they're thinking and bounce ideas around. But you don't want to talk to people who leak confidential discussions."

A similar confidential leak involving RBA governor Philip Lowe was exposed last year when he met market traders from Barrenjoey Capital Partners. The meeting coincided with increasing bond yields and the central bank's aggressive stand on rates.

Lowe, who was appointed to the Barrenjoey board, stated the incident was embarrassing to him and the firm.

Following the incident, the RBA revamped its communications strategy. Now, Michele Bullock, who succeeded him, regularly briefs the media on the board's decisions regarding rates.

Asked about the leak, Treasurer Jim Chalmers responded the government cannot regulate agreements between the Reserve Bank and the commercial banks.

"But I do share the concern .... that some elements of confidentiality may have been breached, and I'm sure that our colleagues at the bank are working through what that means for the way that they conduct those briefings and who's involved," Chalmers told reporters in Canberra.