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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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China’s Evolving Monetary Policy Framework in International Context

4 Dec 2019 RDP PDF 1923KB
implementation such as open market operations and the corridor system for interest rates. ... Inflation. Operational target(s) Monetary base. 7-day interbank repo rate. Overnight cash rate target.
https://www.rba.gov.au/publications/rdp/2019/pdf/rdp2019-11.pdf

The Evolution of Monetary Policy: From Money Targets to Inflation Targets | Conference – 1997

21 Jul 1997 Conferences
Stephen Grenville
In the newly evolved operational procedures, monetary policy was implemented via the cash rate (Macfarlane 1984). ... 9, 14). The desirability of an intermediate target was acknowledged, but the possible intermediate targets (monetary aggregates or the
https://www.rba.gov.au/publications/confs/1997/grenville.html

Consumption Behavior across the Distribution of Liquid Assets

19 Dec 2023 Research Workshop PDF 2239KB
RBA Workshop 2023
https://www.rba.gov.au/publications/workshops/research/2023/pdf/rba-workshop-2023-graham-mcdowall.pdf

Australian Money Market Divergence: Arbitrage Opportunity or Illusion?

12 Sep 2019 RDP PDF 1464KB
Note: (a) Discounted variable rates on owner-occupier housing loans; spread to cash rate. ... at the overnight cash rate target. In recent years this assumption improves net returns relative to.
https://www.rba.gov.au/publications/rdp/2019/pdf/rdp2019-09.pdf

The Term Funding Facility: Has It Encouraged Business Lending?

13 Dec 2022 RDP 2022-07
Sharon Lai, Kevin Lane and Laura Nunn
On 19 March 2020, the RBA introduced a range of measures to lower funding costs and encourage the provision of credit, thereby supporting economic activity: a reduction in the cash rate ... In November 2020, the cost of new funding under the TFF was
https://www.rba.gov.au/publications/rdp/2022/2022-07/full.html
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The Algorithm

15 Dec 2016 RDP 2016-11
Anthony Brassil, Helen Hughson and Mark McManus
Figure 2: Implied Interest Rates of Algorithm Matches. Implied rate of simple interest, deviation from target cash rate, 2015. ... After rounding observations' implied interest rates to the nearest 0.01 basis point, there are 27 separate transaction
https://www.rba.gov.au/publications/rdp/2016/2016-11/algorithm.html
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The Impact of Interest Rates on Bank Profitability: A Retrospective Assessment Using New Cross-country Bank-level Data

21 Jun 2023 RDP 2023-05
Callan Windsor, Terhi Jokipii and Matthieu Bussiere
Starting with the impact on banks' interest margins, several studies identify a nonlinear relationship between interest rates and NIMs, with the marginal impact of a cut to the cash rate larger ... In fact, for France, Norway and Poland a further
https://www.rba.gov.au/publications/rdp/2023/2023-05/full.html
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BA-MARTIN in Detail

18 Jan 2022 RDP 2022-01
Anthony Brassil, Mike Major and Peter Rickards
cash rate and banks' cost of funding increases as the cash rate falls. ... By cash rate level. The lending spreads banks charge above their costs of debt funding have historically been unrelated to the level of interest rates (see Graph 13 in Garner and
https://www.rba.gov.au/publications/rdp/2022/2022-01/ba-martin-in-detail.html
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Asset Prices, Financial Imbalances and Monetary Policy: Are Inflation Targets Enough? | Conference – 2003

18 Aug 2003 Conferences
Charles Bean
It ensures that inflation will be brought back to target, but at a rate that recognises the consequences for activity. ... The target is for an inflation rate for the underlying CPI of 2–3 per cent ‘over the cycle’.
https://www.rba.gov.au/publications/confs/2003/bean.html

MARTIN Gets a Bank Account: Adding a Banking Sector to the RBA’s Macroeconometric Model

12 Jan 2022 RDP PDF 1774KB
Suthakar 2021; Hack and Nicholls 2021). With deposit rates unable to move below zero, cash rate. ... components: changes in the cash rate, changes in banks’ debt/deposit funding spreads and.
https://www.rba.gov.au/publications/rdp/2022/pdf/rdp2022-01.pdf