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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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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

Appendix A: Pass-through Lower Bound in BA-MARTIN

21 Dec 2022 RDP 2022-08
Anthony Brassil
And with credit demand only directly responding to cash rate changes via the resulting change in lending rates, zero pass-through would also mute the effect of cash rate changes on ... λ. parameter in BA-MARTIN) if lending rates remaining constant
https://www.rba.gov.au/publications/rdp/2022/2022-08/appendix-a.html

Introduction

21 Dec 2022 RDP 2022-08
Anthony Brassil
Holding lending rates constant following a cash rate reduction would therefore prevent any NIM reduction and would prevent any change to credit demand; if zero pass-through is enough to prevent ... a risk premium increase). If this risk premium increase
https://www.rba.gov.au/publications/rdp/2022/2022-08/introduction.html

The Literature through the Lens of Banks' Balance Sheets

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/the-literature-through-the-lens-of-banks-balance-sheets.html

Conclusions, Policy Implications and Future Research

21 Dec 2022 RDP 2022-08
Anthony Brassil
The flip side to this is that the pass-through of cash rate changes to lending rates may have been more muted than what the literature would predict. ... And pass-through would likely remain at similar levels were the cash rate reduced to the small
https://www.rba.gov.au/publications/rdp/2022/2022-08/conclusions-policy-implications-and-future-research.html

Investigating the ‘Reversal Rate’ in Australia

21 Dec 2022 RDP 2022-08
Anthony Brassil
in Section 4 is not operational) but that they still have a capital shortfall when the cash rate is reduced further. ... responses more than offset the reductions in r. D,t. that come from cash rate reductions at low interest rates?
https://www.rba.gov.au/publications/rdp/2022/2022-08/investigating-the-reversal-rate-in-australia.html