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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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Valuing Safety and Privacy in Retail Central Bank Digital Currency

11 Apr 2024 RDP 2024-02
Zan Fairweather, Denzil Fiebig, Adam Gorajek, Rochelle Guttmann, June Ma and Jack Mulqueeney
Source: RBA calculations, based on data from Ipsos. In the second extension model, the estimated safety and privacy valuations vary materially for those with medium to high rates of cash use ... But because high rates of cash use are uncommon in the
https://www.rba.gov.au/publications/rdp/2024/2024-02/full.html
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Do Monetary Policy and Economic Conditions Impact Innovation? Evidence from Australian Administrative Data

15 Feb 2024 RDP 2024-01
Omer Majeed, Jonathan Hambur and Robert Breunig
An inherent difficulty in examining the effect of monetary policy on innovation is that the official cash rate will be endogenous. ... We consider four measures:. The change in the policy rate (cash rate) itself.
https://www.rba.gov.au/publications/rdp/2024/2024-01/full.html
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Does Monetary Policy Affect Non-mining Business Investment in Australia? Evidence from BLADE

22 Dec 2023 RDP 2023-09
nmbi: non-mining business investment – ABS national accounts. btcs: Beckers (2020) shock measure, not accounting for cash rate expectations. ... cr: cash rate changes – RBA statistical table F1.1 Interest Rates and Yields – Money Market – Monthly.
https://www.rba.gov.au/publications/rdp/2023/2023-09/read-me.html

Data

21 Dec 2023 RDP 2023-10
Kim Nguyen and Jonathan Hambur
Return on assets is measured as EBITDA/assets100, cash ratio is measured as cash/assets100 and gearing ratio is measured as debt/equity100. ... We experimented with constructing a panel using names in company reports and work histories in S&P Capital IQ,
https://www.rba.gov.au/publications/rdp/2023/2023-10/data.html
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Methodology

19 Dec 2023 RDP 2023-09
We allow the shock to enter the model directly, similar to Durante et al (2022), rather than using it as an instrument for changes in the cash rate. ... That said, the results are reasonably robust to using the shock as an instrument for cash rate changes
https://www.rba.gov.au/publications/rdp/2023/2023-09/methodology.html

Appendix C: Additional Microdata Results

19 Dec 2023 RDP 2023-09
IV approach, full sample. Notes: Monetary policy shock is instrumented via cash rate.
https://www.rba.gov.au/publications/rdp/2023/2023-09/appendix-c.html

Appendix B: Aggregate Data Results

19 Dec 2023 RDP 2023-09
100 basis point monetary policy shock, VAR model. Notes: Small VAR with (log) real trade-weighted index, (log) consumption, (log) non-mining business investment, (log) dwelling investment and cash rate.
https://www.rba.gov.au/publications/rdp/2023/2023-09/appendix-b.html

Conclusion

19 Dec 2023 RDP 2023-09
The effects appear similar across firm age groups, suggesting that the aging of the firm population that has occurred due to declining firm entry rates should not have weakened the effect ... The effects are also similar across firm sizes. This suggests
https://www.rba.gov.au/publications/rdp/2023/2023-09/conclusion.html

Introduction

19 Dec 2023 RDP 2023-09
borrowing rates) – the ‘user cost of capital’; and loosening credit and financing constraints by freeing up cash flow for indebted firms or raising the value of collateral that firms can pledge ... This highlights the important role that cash flow
https://www.rba.gov.au/publications/rdp/2023/2023-09/introduction.html

Results with Tax Data on Actual Investment

19 Dec 2023 RDP 2023-09
For example, the decline in the cash rate following the shock in Beckers (2020) is much more persistent than that implied by the Taylor rules in MARTIN or the RBA's ... As such, we may not be comparing like for like. Following an initial shock of 100
https://www.rba.gov.au/publications/rdp/2023/2023-09/results-with-tax-data-on-actual-investment.html