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RBA Glossary definition for Cash Rate

Cash Rate – The interest rate which banks pay to borrow funds from other banks in the money market on an overnight basis. The cash rate is the Reserve Bank of Australia's operational target for the implementation of monetary policy. It is also an important financial benchmark in the Australian financial markets. It is used as the reference rate for Australian dollar Overnight Indexed Swaps (OIS) and the ASX 30 Day Interbank Cash Rate Futures. The Reserve Bank of Australia is the administrator of the cash rate. The cash rate is calculated as the weighted average interest rate on overnight unsecured loans between banks settled in the Reserve Bank Information and Transfer System (RITS). The Cash Rate is also known by the acronym AONIA in financial markets.

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The Yield and Market Function Effects of the Reserve Bank of Australia's Bond Purchases

24 May 2022 RDP 2022-02
Richard Finlay, Dmitry Titkov and Michelle Xiang
OIS rates provide a measure of market expectations for the evolution of the cash rate, and so can be used as at least a partial control to isolate the effect of ... As noted earlier, OIS rates provide a measure of market expectations for the evolution of
https://www.rba.gov.au/publications/rdp/2022/2022-02/full.html

Event Study of Announcement Effects

24 May 2022 RDP 2022-02
Richard Finlay, Dmitry Titkov and Michelle Xiang
OIS rates provide a measure of market expectations for the evolution of the cash rate, and so can be used as at least a partial control to isolate the effect of ... As noted earlier, OIS rates provide a measure of market expectations for the evolution of
https://www.rba.gov.au/publications/rdp/2022/2022-02/event-study-of-announcement-effects.html

Implementation Effects

24 May 2022 RDP 2022-02
Richard Finlay, Dmitry Titkov and Michelle Xiang
This suggests that, although the Reserve Bank tended to purchase bonds in response to sustained increases in market participants' expectations for the cash rate (when the increases were reflected in the ... yield on the 3-year AGS), the Reserve Bank's
https://www.rba.gov.au/publications/rdp/2022/2022-02/implementation-effects.html

Introduction

24 May 2022 RDP 2022-02
Richard Finlay, Dmitry Titkov and Michelle Xiang
Bond yields can change due to changing expectations of future short-term interest rates or changes in term premia, and in Section 6 we discuss the results of a model that ... The level of the yield target was changed once, in line with a change in the
https://www.rba.gov.au/publications/rdp/2022/2022-02/introduction.html

Additional Analysis of Yield Effects

24 May 2022 RDP 2022-02
Richard Finlay, Dmitry Titkov and Michelle Xiang
As noted earlier, the 10-year OIS rate will capture market expectations for the cash rate path, and therefore any signalling effect of bond purchases. ... Treasury yield–OIS spread. 10-year AUD OIS rate. 0.79. (0.12). 0.81. (0.12).
https://www.rba.gov.au/publications/rdp/2022/2022-02/additional-analysis-of-yield-effects.html

Non-technical summary for ‘The Yield and Market Function Effects of the Reserve Bank of Australia's Bond Purchases’

24 May 2022 RDP 2022-02
Richard Finlay, Dmitry Titkov and Michelle Xiang
The lower interest rates on the bonds then influence many other rates throughout the economy, including the exchange rate and borrowing rates for households and businesses. ... The changes in these interest rates can then lead to greater economic
https://www.rba.gov.au/publications/rdp/2022/2022-02/non-technical-summary.html

Expected Future Short-term Rates and Term Premia

24 May 2022 RDP 2022-02
Richard Finlay, Dmitry Titkov and Michelle Xiang
less clear: future short-term rate expectations could be lowered via the signalling channel if bond purchases were taken as a signal that policy rates would be held lower for longer ... and also survey data on economists' cash rate and inflation
https://www.rba.gov.au/publications/rdp/2022/2022-02/expected-future-short-term-rates-and-term-premia.html