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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.

Search Results

Monetary Policy, Equity Markets and the Information Effect

23 Mar 2021 RDP 2021-04
Calvin He
Consistent with standard models, unexpected increases in the cash rate cause equity prices to fall (Figure 3). ... The absolute value of the effect is much smaller when using the cash rate as the independent variable.
https://www.rba.gov.au/publications/rdp/2021/2021-04/full.html

Robustness and Extensions

1 Apr 2021 RDP 2021-04
Calvin He
These represented the largest changes in the cash rate since the early 1990s. ... 0. ]. is an indicator variable for when the cash rate target was changed, and.
https://www.rba.gov.au/publications/rdp/2021/2021-04/robustness-and-extensions.html

Results

1 Apr 2021 RDP 2021-04
Calvin He
Consistent with standard models, unexpected increases in the cash rate cause equity prices to fall (Figure 3). ... The absolute value of the effect is much smaller when using the cash rate as the independent variable.
https://www.rba.gov.au/publications/rdp/2021/2021-04/results.html

Appendix A: Data Description

1 Apr 2021 RDP 2021-04
Calvin He
Source. Start date. End date. Missing data. Cash rate target. RBA.
https://www.rba.gov.au/publications/rdp/2021/2021-04/appendix-a.html

References

1 Apr 2021 RDP 2021-04
Calvin He
Brassil A (2019), ‘How Insufficiently Responsive Monetary Policy Can Lead to a Positive Relationship between Consumer Confidence and the Cash Rate’, Unpublished manuscript, Reserve Bank of Australia, 18 December. ... Cook T and T Hahn (1989), ‘The
https://www.rba.gov.au/publications/rdp/2021/2021-04/references.html

Data and Method

1 Apr 2021 RDP 2021-04
Calvin He
An OIS is an over-the-counter agreement between two parties where one party agrees to pay the other a fixed interest rate in exchange for receiving the average cash rate ... This could happen if a change in the cash rate also resolves some uncertainty in
https://www.rba.gov.au/publications/rdp/2021/2021-04/data-and-method.html

Appendix B: Regression Output

1 Apr 2021 RDP 2021-04
Calvin He
One-year-ahead earnings growth. Long-term earnings growth. Monetary policy surprise. Cash rate. ... 0.030). Monetary policy surprise. 2.988. (0.434). 1.919. (0.864). 0.021. (0.234). Cash rate.
https://www.rba.gov.au/publications/rdp/2021/2021-04/appendix-b.html

Introduction

1 Apr 2021 RDP 2021-04
Calvin He
For example, if the conventional effects of cash rate changes (e.g. ... To overcome this issue I use high-frequency financial data of Australia's overnight index swap (OIS) market, which measures expectations of the cash rate.
https://www.rba.gov.au/publications/rdp/2021/2021-04/introduction.html

Monetary Policy, Equity Markets and the Information Effect

23 Mar 2021 RDP 2021-04
Calvin He
data/mp-surprises.csv and. /data/mp-surprises-all.csv: only show the cash rate change and monetary policy surprise measure. ... The cash rate changes are available from the RBA web site, while the monetary policy surprises are constructed with data from
https://www.rba.gov.au/publications/rdp/2021/2021-04/read-me.html

Non-technical summary for ‘Monetary Policy, Equity Markets and the Information Effect’

23 Mar 2021 RDP 2021-04
Calvin He
Under the information effect hypothesis, people perceive cash rate cuts to be revealing negative economic information. ... Some claim this effect is so strong it reverses the otherwise expansionary effects of cash rate cuts.
https://www.rba.gov.au/publications/rdp/2021/2021-04/non-technical-summary.html