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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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Credit Spreads, Monetary Policy and the Price Puzzle

1 Jan 2020 RDP 2020-01
Benjamin Beckers
in risk premia in large business lending rates is met by an 8 basis point cut to the cash rate. ... If the Board changes the cash rate for reasons other than achieving its inflation target, these changes can be used as instruments for policy shocks with
https://www.rba.gov.au/publications/rdp/2020/2020-01/full.html

Non-technical summary for ‘Credit Spreads, Monetary Policy and the Price Puzzle’

1 Jan 2020 RDP 2020-01
Benjamin Beckers
For Australia, the Reserve Bank typically raises its policy rate – the cash rate – when it expects inflation to rise above its target range in the future, and lowers the cash rate ... A lower cash rate increases inflation and output growth, and
https://www.rba.gov.au/publications/rdp/2020/2020-01/non-technical-summary.html

Read me

1 Jan 2020 RDP 2020-01
Benjamin Beckers
Main file will only run for RBA users due to internal functionality] Collect and transform data on cash rate, RBA forecasts, US data from FRED, Australian lending and money market rates. ... File. Section in paper and description. Output.
https://www.rba.gov.au/publications/rdp/2020/2020-01/read-me.html

The Cash Rate Response to Credit Market Conditions

28 Jan 2020 RDP 2020-01
Benjamin Beckers
Table 2: Estimated Policy Rules with Credit Spreads and Expected Cash Rate Changes. ... I further explored spreads between small and large business lending rates, and the variable mortgage to cash rate spread but found no response of the cash rate to
https://www.rba.gov.au/publications/rdp/2020/2020-01/the-cash-rate-response-to-credit-market-conditions.html

Credit Market Conditions and the Bank's Forecast Errors

28 Jan 2020 RDP 2020-01
Benjamin Beckers
If these conditions ease and credit intermediation and credit supply to the real economy increases, the cash rate increases. ... The results are also robust to including the expected cash rate change as a predictor for inflation forecasts.
https://www.rba.gov.au/publications/rdp/2020/2020-01/credit-market-conditions-and-the-banks-forecast-errors.html

The Effects of Monetary Policy Shocks on Inflation, Unemployment and Output

28 Jan 2020 RDP 2020-01
Benjamin Beckers
Cumulative quarterly responses to 100 basis point cash rate shock, 1994:Q1–2018:Q4. ... control for the cash rate's systematic response to credit and money market conditions.
https://www.rba.gov.au/publications/rdp/2020/2020-01/the-effects-of-monetary-policy-shocks-on-inflation-unemployment-and-output.html

Biased Romer and Romer Estimates – The Role of Credit Spreads

28 Jan 2020 RDP 2020-01
Benjamin Beckers
If the Board changes the cash rate for reasons other than achieving its inflation target, these changes can be used as instruments for policy shocks with regard to inflation. ... Another source of bias may be that the cash rate affects inflation through Z
https://www.rba.gov.au/publications/rdp/2020/2020-01/biased-romer-and-romer-estimates-the-role-of-credit-spreads.html