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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.

Search Results

The Distributional Effects of Monetary Policy: Evidence from Local Housing Markets

1 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
In the baseline models, the stance of monetary policy is measured by the cash rate target, as published in RBA statistical table F1 (Interest Rates and Yields – Money Market). ... Δ. c. r. t. represents the quarterly percentage point change in the
https://www.rba.gov.au/publications/rdp/2020/2020-02/full.html

Robustness Tests

14 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
c. r. t. 1. is the quarterly lag of the cash rate level;. ... Substituting the monetary policy shocks. (. ε. t. m. ). in place for cash rate changes. (.
https://www.rba.gov.au/publications/rdp/2020/2020-02/robustness-tests.html

Data

14 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
In the baseline models, the stance of monetary policy is measured by the cash rate target, as published in RBA statistical table F1 (Interest Rates and Yields – Money Market). ... The monetary policy shock series runs from 1992 to 2018. The controls
https://www.rba.gov.au/publications/rdp/2020/2020-02/data.html

Appendix A: Data Description

14 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
Quarterly. Cash rate target. RBA. March 1990. June 2019. Quarterly. GDP growth, year-ended. ... ABS Census. 2016. Outright ownership rate. Share of dwellings owned outright; per cent.
https://www.rba.gov.au/publications/rdp/2020/2020-02/appendix-a.html

References

14 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
La Cava G, H Hughson and G Kaplan (2016), ‘The Household Cash Flow Channel of Monetary Policy’, RBA Research Discussion Paper No 2016-12. ... Lim GC and S Tsiaplias (2018), ‘Interest Rates, Local Housing Markets and House Price Over-Reactions’,
https://www.rba.gov.au/publications/rdp/2020/2020-02/references.html

Appendix C: Rolling Samples

14 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
Figure C1: Differential Housing Price Response to Monetary Policy. 100 basis point increase in cash rate, relative to median, six-quarter horizon.
https://www.rba.gov.au/publications/rdp/2020/2020-02/appendix-c.html

Non-technical summary for ‘The Distributional Effects of Monetary Policy: Evidence from Local Housing Markets’

1 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
When the RBA lowers the cash rate housing prices typically end up higher than they otherwise would have been. ... Relatedly, we also find that changes in the cash rate alter housing wealth inequality.
https://www.rba.gov.au/publications/rdp/2020/2020-02/non-technical-summary.html

Heterogeneity in the Sensitivity of Local Housing Prices to Monetary Policy

14 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
Δ. c. r. t. represents the quarterly percentage point change in the cash rate target. ... Carroll et al 2017). Therefore, their discount rates may be relatively sensitive to short-term interest rates, such as the cash rate.
https://www.rba.gov.au/publications/rdp/2020/2020-02/heterogeneity-in-the-sensitivity-of-local-housing-prices-to-monetary-policy.html

Introduction

14 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
The variation in price responses across regions also suggests that reductions in the cash rate increase housing wealth inequality. ... responsive to interest rate cuts due to a reduced ability to refinance mortgages.
https://www.rba.gov.au/publications/rdp/2020/2020-02/introduction.html

Theoretical Framework

14 Feb 2020 RDP 2020-02
Calvin He and Gianni La Cava
cash rate. (. ... Δ. d. i. t. ε. i. t. where the sensitivity of local housing price growth to the cash rate is a function of various structural parameters that vary by local housing
https://www.rba.gov.au/publications/rdp/2020/2020-02/theoretical-framework.html