Search: cash rate explained
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 Impact of Interest Rates on Bank Profitability: A Retrospective Assessment Using New Cross-country Bank-level Data
21 Jun 2023
RDP
2023-05
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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Australian Money Market Divergence: Arbitrage Opportunity or Illusion?
1 Sep 2019
RDP
2019-09
Note: (a) Discounted variable rates on owner-occupier housing loans; spread to cash rate. ... Subsequently in 2019, net returns in all these money markets declined as the spread between money market rates and cash rate expectations narrowed.
https://www.rba.gov.au/publications/rdp/2019/2019-09/full.html
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How Australians Pay: Evidence from the 2016 Consumer Payments Survey
1 Jul 2017
RDP
2017-04
amount, source) and the amount of cash they held after the top-up. ... Similarly, higher-income consumers have switched away from cash towards cards at a faster rate than respondents with lower incomes in recent years.
https://www.rba.gov.au/publications/rdp/2017/2017-04/full.html
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A Model of the Australian Housing Market
1 Mar 2019
RDP
2019-01
The model suggests that much of the strength in housing prices and construction over the past few years can be explained by the fall in interest rates – some of this fall ... So long-term interest rates enter the user cost. However, housing prices seem
https://www.rba.gov.au/publications/rdp/2019/2019-01/full.html
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Macroprudential Limits on Mortgage Products: The Australian Experience
26 Jul 2021
RDP
2021-07
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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Why Do Companies Fail?
1 Nov 2016
RDP
2016-09
H2: Within public companies, listed companies should have particularly high rates of failure, on average. ... We measure liquidity as the ratio of cash (and cash equivalents) to total assets.
https://www.rba.gov.au/publications/rdp/2016/2016-09/full.html
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The Effect of Credit Constraints on Housing Prices: (Further) Evidence from a Survey Experiment
31 Jan 2023
RDP
2023-01
Figure 3: Effect of Lower Rates on Housing Demand. Mortgage rate lowered from 6.5 per cent to 4.5 per cent. ... The response of WTP to a change in interest rate is little changed across the spectrum of subjective discount rates.
https://www.rba.gov.au/publications/rdp/2023/2023-01/full.html
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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
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
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The Role of Collateral in Borrowing
20 Jan 2021
RDP
2021-01
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 ... face value of securities, and money
https://www.rba.gov.au/publications/rdp/2021/2021-01/full.html
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The Cash Market in Australia
31 Jan 2006
RDP
PDF
245KB
The weighted average of these two rates is called the official cash rate. ... In practice, it is the unofficial cash rate which is targeted by the Bank (though, as explained later, the unofficial and official cash rates are about equal).
https://www.rba.gov.au/publications/rdp/1992/pdf/rdp9214.pdf