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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

The Implementation of Monetary Policy in Australia

1 Jul 1997 RDP 9703
Ric Battellino, John Broadbent and Philip Lowe
Research Discussion Paper – RDP 9703 The Implementation of Monetary Policy in Australia. Ric Battellino, John Broadbent and Philip Lowe. July 1997. 191. KB. This paper was prepared for the Autumn Meeting of Central Bank Economists at the Bank for
https://www.rba.gov.au/publications/rdp/1997/9703/

The Implementation of Monetary Policy in Australia

1 Jul 1997 RDP 9703
Ric Battellino, John Broadbent and Philip Lowe
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/1997/9703.html

The Impact on Financial Markets

1 Jul 1997 RDP 9703
Ric Battellino, John Broadbent and Philip Lowe
With the Bank announcing the target cash rate, and daily volatility in the cash rate much reduced, one would expect a commensurate decline in volatility in short-term yields, with yields ... 1990, volatility is measured using differences in the actual
https://www.rba.gov.au/publications/rdp/1997/9703/impact-financial-markets.html

References

1 Jul 1997 RDP 9703
Ric Battellino, John Broadbent and Philip Lowe
33–50. Blinder, A. (1995), ‘Targets, Instruments and Stabilisation’, Marshall Lecture I, University of Cambridge. ... 81. Lowe, P. (1995), ‘The Link Between the Cash Rate and Market Interest Rates’, Reserve Bank of Australia Research Discussion
https://www.rba.gov.au/publications/rdp/1997/9703/references.html

The Thinking Underlying Current Arrangements

1 Jul 1997 RDP 9703
Ric Battellino, John Broadbent and Philip Lowe
The process of announcing changes to the cash rate target has some of the same characteristics as a system of administered interest rates, and there was therefore some concern, when the ... The Australian experience is summarised in Table 2. Using data
https://www.rba.gov.au/publications/rdp/1997/9703/thinking-underlying-current-arrangements.html

Concluding Remarks

1 Jul 1997 RDP 9703
Ric Battellino, John Broadbent and Philip Lowe
Market conditions are easier to manage, given that the behaviour of participants is conditioned by the fact that they do not expect the cash rate to move much away from the ... Benefits have spread to the wider market, including less day-to-day
https://www.rba.gov.au/publications/rdp/1997/9703/concluding-remarks.html

The Australian Framework for Implementing Monetary Policy

1 Jul 1997 RDP 9703
Ric Battellino, John Broadbent and Philip Lowe
where r. t. is the actual cash rate and. is the target cash rate. ... As expected, the estimates for both periods indicate that eventually changes in the target cash rate are fully reflected in the actual cash rate.
https://www.rba.gov.au/publications/rdp/1997/9703/australian-framework-implementing-monetary.html