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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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Appendix A: Adjustment of Actual Cash Rate to Target Rate

1 Jul 1997 RDP 9703
Ric Battellino, John Broadbent and Philip Lowe
where:. r. t. is the actual (unofficial) cash rate; and. is the target cash rate. ... Daily data were used in estimation and seven lags of the changes in both the actual and target cash rate were included initially.
https://www.rba.gov.au/publications/rdp/1997/9703/appendix-a.html
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Bulletin

18 Apr 2024 Bulletin
Insights into the economy and financial system from teams throughout the Reserve Bank of Australia
https://www.rba.gov.au/publications/bulletin/

Determination of Cash Rates

1 Dec 1992 RDP 9214
Bob Rankin
Under its present operating procedures, the Reserve Bank announces a target level for cash rates. ... take action to keep cash rates close to the announced target rate r.
https://www.rba.gov.au/publications/rdp/1992/9214/determination-of-cash-rates.html
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Cash Rate Pass-through to Outstanding Mortgage Rates

18 Apr 2024 Bulletin – April 2024
Benjamin Ung
The interest rate paid by outstanding mortgage borrowers increased by around 320 basis points between May 2022 and December 2023, around 105 basis points less than the cumulative increase in the cash rate over this period.
https://www.rba.gov.au/publications/bulletin/2024/apr/cash-rate-pass-through-to-outstanding-mortgage-rates.html

The Consequences of Low Interest Rates for the Australian Banking Sector

21 Dec 2022 RDP 2022-08
Anthony Brassil
While the cash rate target has remained above zero in Australia, the RBA implemented several unconventional policies designed to stimulate the economy. ... Central bank deposits in Australia are remunerated at a rate that moves with the cash rate target.
https://www.rba.gov.au/publications/rdp/2022/2022-08/full.html
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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
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China's Evolving Monetary Policy Framework in International Context

1 Dec 2019 RDP 2019-11
Bradley Jones and Joel Bowman
Exchange rate. Inflation. Operational target(s). Monetary base. 7-day interbank repo rate. ... Overnight cash rate target. Reserves/asset purchases. Primary instrument(s). PBC repo rate in corridor system.
https://www.rba.gov.au/publications/rdp/2019/2019-11/full.html
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Recent Developments in the Cash Market

13 Jun 2023 Bulletin - June 2023 PDF 815KB
https://www.rba.gov.au/publications/bulletin/2023/jun/pdf/recent-developments-in-the-cash-market.pdf

Firms' Investment Decisions and Interest Rates

18 Jun 2015 Bulletin – June 2015
Kevin Lane and Tom Rosewall
Firms typically evaluate investment opportunities by calculating expected rates of return and the payback period (the time taken to recoup the capital outlay). Liaison and survey evidence indicate that Australian firms tend to require expected
https://www.rba.gov.au/publications/bulletin/2015/jun/1.html

Appendix B: Data Definitions

31 Mar 1999 RDP 1999-03
Andrea Brischetto and Gordon de Brouwer
ABS Cat. No. 6202.03, Table 2. From 1990 onwards, the target cash rate. ... Prior to 1990, the unofficial 11am call cash rate. Reserve Bank of Australia Bulletin, Table F.1.
https://www.rba.gov.au/publications/rdp/1999/1999-03/appendix-b.html
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