anishaprasad
Active Member
- Joined
- Jun 11, 2021
- Messages
- 47
- Gender
- Female
- HSC
- 2022
Explain how the Reserve Bank of Australia determines the cash rate
-
Looking for HSC notes and resources? Check out our Notes & Resources page
help pls!! much appreciated :) (1 Viewer)
- Thread starter anishaprasad
- Start date
First of all, we need to understand what the cash rate is. The cash rate is the interest rate which banks pay to borrow funds from other banks in the money market on an overnight basis. The cash rate influences other interest rates in the economy, affecting the behaviour of borrowers and lenders, economic activity and ultimately the rate of inflation.
In terms of how the Reserve Bank of Australia (RBA) determines the cash rate, the RBA calculates the cash rate as the volume-weighted average interest rate at which cash market transactions were settled. The Cash Rate is rounded to two decimal places.
Prior to this, the RBA collects information from banks on what is known as Reserve Bank Information and Transfer System (RITS). This information includes:
In terms of how the Reserve Bank of Australia (RBA) determines the cash rate, the RBA calculates the cash rate as the volume-weighted average interest rate at which cash market transactions were settled. The Cash Rate is rounded to two decimal places.
Prior to this, the RBA collects information from banks on what is known as Reserve Bank Information and Transfer System (RITS). This information includes:
- Counterparty banks to a transaction
- The interest rate at which interbank funds were borrowed and lent
- the "deal date", i.e. the date the cash market transaction was contracted
anishaprasad
Active Member
- Joined
- Jun 11, 2021
- Messages
- 47
- Gender
- Female
- HSC
- 2022
tysm!!!!First of all, we need to understand what the cash rate is. The cash rate is the interest rate which banks pay to borrow funds from other banks in the money market on an overnight basis. The cash rate influences other interest rates in the economy, affecting the behaviour of borrowers and lenders, economic activity and ultimately the rate of inflation.
In terms of how the Reserve Bank of Australia (RBA) determines the cash rate, the RBA calculates the cash rate as the volume-weighted average interest rate at which cash market transactions were settled. The Cash Rate is rounded to two decimal places.
Prior to this, the RBA collects information from banks on what is known as Reserve Bank Information and Transfer System (RITS). This information includes:
I hope this helps!
- Counterparty banks to a transaction
- The interest rate at which interbank funds were borrowed and lent
- the "deal date", i.e. the date the cash market transaction was contracted
i really appreciate it. have a nice night
No worries, all the best! Same to you!tysm!!!!
i really appreciate it. have a nice night