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18 Jan 2022
RDP
2022-01
Anthony Brassil, Mike Major and Peter Rickards
In the RBA's macroeconometric model, known as MARTIN (Ballantyne et al 2019), the difference between banks' mortgage rates and the RBA's cash rate is treated as exogenous (i.e. ... With deposit rates unable to move below zero, cash rate reductions cause
https://www.rba.gov.au/publications/rdp/2022/2022-01/full.html
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
18 Jan 2022
RDP
2022-01
Anthony Brassil, Mike Major and Peter Rickards
In extreme cases, it may be that a lower cash rate slows capital restoration by so much that banks' endogenous credit supply responses more than offset the macroeconomic effect of the ... cash rate cut.
https://www.rba.gov.au/publications/rdp/2022/2022-01/conclusion.html
18 Jan 2022
RDP
2022-01
Anthony Brassil, Mike Major and Peter Rickards
r. D. =. 0.05. %. ). as the cash rate falls, and an endogenous response to capital shortfalls. (. ... is treated as a random walk. r. C,t. is the cash rate.
https://www.rba.gov.au/publications/rdp/2022/2022-01/online-appendix.html
18 Jan 2022
RDP
2022-01
Anthony Brassil, Mike Major and Peter Rickards
In the RBA's macroeconometric model, known as MARTIN (Ballantyne et al 2019), the difference between banks' mortgage rates and the RBA's cash rate is treated as exogenous (i.e. ... With deposit rates unable to move below zero, cash rate reductions cause
https://www.rba.gov.au/publications/rdp/2022/2022-01/introduction.html
18 Jan 2022
RDP
2022-01
Anthony Brassil, Mike Major and Peter Rickards
Therefore, the direct effects of interest rate changes on banks' profits can be decomposed into three components: changes in the cash rate, changes in banks' debt/deposit funding spreads and changes ... If losses are small and banks' capital is
https://www.rba.gov.au/publications/rdp/2022/2022-01/ba-martin-in-a-nutshell.html
18 Jan 2022
RDP
2022-01
Anthony Brassil, Mike Major and Peter Rickards
reduces lending rates by 25 basis points – irrespective of the level of the cash rate. ... Our focus is on the cash rate pass-through excluding unconventional policies that work through other interest rates.
https://www.rba.gov.au/publications/rdp/2022/2022-01/how-does-the-pass-through-of-monetary-policy-change-with-the-state-of-the-economy.html
18 Jan 2022
RDP
2022-01
Anthony Brassil, Mike Major and Peter Rickards
But when the cash rate is low, further cuts cause smaller reductions in banks' funding costs due to retail deposit interest rates having a lower bound around zero; monetary policy is ... Most loans have variable interest rates, and even the fixed
https://www.rba.gov.au/publications/rdp/2022/2022-01/non-technical-summary.html
18 Jan 2022
RDP
2022-01
Anthony Brassil, Mike Major and Peter Rickards
In reality, monetary policy would respond by reducing the cash rate (or via unconventional policies), and it is likely that governments and APRA would also respond. ... reducing the cash rate by the same amount.
https://www.rba.gov.au/publications/rdp/2022/2022-01/how-might-covid-19-have-affected-the-banking-sector-and-what-feedback-would-this-have-had-on-the-real-economy.html