ipl-logo

How Does The Rba Affect The Cash Rate In Australia

224 Words1 Pages
In Australia, the way the RBA applies monetary policy is through the short term interest rate or the cash rate. The RBA very closely controls the cash rate; the Board of the RBA meets on the first Tuesday of every month except January, where the developments of the Australian economy and international economies are analysed. From there decisions are made as to what changes, if any, to the interest rate will be made that month to meet the objectives regarding inflation, unemployment and economic growth. As can be seen in figure 5 below, since 2005, interest rates have been decreasing. Interest rates are decreased when the circular flow has slowed down, to promote spending which leads to an increase in aggregate demand hence speeding it up.
Open Document