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RBA Glossary definition for cash rate target

cash rate target – As in most developed countries, the stance of monetary policy in Australia is expressed in terms of a target for an overnight interest rate. The rate used by the Reserve Bank of Australia is the cash rate (also known as the interbank overnight rate). When the Reserve Bank Board decides that a change in monetary policy should occur, it specifies a new target for the cash rate. A decision to ease policy is reflected in a new lower target for the cash rate, while a decision to tighten policy is reflected in a higher target.

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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Credit Spreads, Monetary Policy and the Price Puzzle

23 Jan 2020 RDP PDF 1959KB
as indicated by low risk premia in lending and money market rates) by raising the cash rate over. ... premia in large business lending rates is met by an 8 basis point cut to the cash rate.
https://www.rba.gov.au/publications/rdp/2020/pdf/rdp2020-01.pdf

Cost-benefit Analysis of Leaning against the Wind

1 Jul 2019 RDP 2019-05
Trent Saunders and Peter Tulip
The optimal control scenario sets interest rates so as to minimise the squared deviations of inflation from its target, the unemployment rate from the NAIRU, and squared changes in the policy ... to the higher cash rate, before it gradually returns to
https://www.rba.gov.au/publications/rdp/2019/2019-05/full.html
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Appendix C: Forecast Data and Alternative Specifications

29 May 2017 RDP 2017-02
James Bishop and Peter Tulip
data. However, our baseline results are not qualitatively affected if we re-estimate our models using cash rate changes in end-quarter Board meetings over this period. ... Since the Bank only began announcing cash rate outcomes from 1990 onwards, for the
https://www.rba.gov.au/publications/rdp/2017/2017-02/appendix-c.html
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The Model

9 Oct 2019 RDP 2019-10
Nicholas Garvin
They can allocate l between two types of liquid assets – securities ‘s’ and cash ‘c’. ... Banks' total demand for liquidity from the securities market, in cash value, is written L.
https://www.rba.gov.au/publications/rdp/2019/2019-10/the-model.html
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Macroprudential Limits on Mortgage Products: The Australian Experience

26 Jul 2021 RDP 2021-07
Nicholas Garvin, Alex Kearney and Corrine Rosé
Comparing the middle and bottom panels makes clear that mortgage rates move fairly closely with the cash rate. ... given that the cash rate is a very strong determinant of mortgage rates.
https://www.rba.gov.au/publications/rdp/2021/2021-07/full.html
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Demand in the Repo Market: Indirect Perspectives from Open Market Operations from 2006 to 2020

15 May 2024 RDP 2024-03
Chris Becker, Anny Francis, Calebe de Roure and Brendan Wilson
However, demand becomes more elastic and flatter as the repo rate falls, indicating that when the repo rate is below other market rates, participants are increasingly willing to accept more cash. ... This measure of the cash rate has been published by
https://www.rba.gov.au/publications/rdp/2024/2024-03/full.html
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Macroprudential Limits on Mortgage Products: The Australian Experience

4 Aug 2021 RDP PDF 2345KB
quarter t , minus the cash rate, in percentage points. It is first differenced in most regressions. ... controls, given that the cash rate is a very strong determinant of mortgage rates.
https://www.rba.gov.au/publications/rdp/2021/pdf/rdp2021-07.pdf

Is the Phillips Curve Still a Curve? Evidence from the Regions

31 Aug 2021 RDP 2021-09
James Bishop and Emma Greenland
These findings have important implications for policy. According to the RBA Board (RBA 2021a), the cash rate will not be raised until inflation is sustainably within the 2 to 3 per ... For example, in response to a persistent negative supply shock a
https://www.rba.gov.au/publications/rdp/2021/2021-09/full.html
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The Cash Market in Australia

31 Jan 2006 RDP PDF 245KB
The analysis in the paper is based on the Reserve Bank's present approach to monetary policy in which it announces a target cash rate and operates to maintain rates close ... But the Reserve Bank has announced targets for cash rates - in order to keep to
https://www.rba.gov.au/publications/rdp/1992/pdf/rdp9214.pdf

The Role of Collateral in Borrowing

20 Jan 2021 RDP 2021-01
Nicholas Garvin, David W Hughes and José-Luis Peydró
Heightened demand for high-quality collateral is evident from the interest rate differential on collateralised loans across collateral types – rates for first-best collateral fall market-wide by over 100 basis ... In the unsecured market, the overnight
https://www.rba.gov.au/publications/rdp/2021/2021-01/full.html
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