Inside the RBA: How the Reserve Bank Implements Monetary Policy?

In this episode, we take a deep dive into how the Reserve Bank of Australia (RBA) implements monetary policy, focusing on its primary pre-pandemic tool: the cash rate target. We unpack how the cash market functions, looking at the role of Exchange Settlement (ES) balances, the policy interest rate corridor, and how these mechanisms help keep the cash rate aligned with the RBA's target. We also explore the shift in strategy during the COVID-19 pandemic, when the RBA introduced unconventional monetary policy tools like forward guidance, asset purchases, and the Term Funding Facility. Finally, we look ahead to the RBA’s future direction as it transitions to an ample reserves system. This episode is essential listening for students, economists, and anyone curious about how central banking adapts in a changing world.

Source: https://www.rba.gov.au/education/resources/explainers/