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RESERVE BANK OF AUSTRALIA
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Education Monetary Policy in Australia
Monetary Policy in Australia
The Reserve Bank conducts monetary policy
to achieve its goals of price stability, full
employment, and the economic prosperity
and welfare of the Australian people.
It does this by targeting inflation between 2-3%. The cash rate is
the primary tool used to manage inflation. The RBA has, at times,
also used other tools, including targeting longer-term interest rates
and buying and selling government bonds.
The Reserve Bank Board meets
eight times a year to determine
the appropriate monetary
policy settings.
Monetary policy, including the cash rate,
has a strong influence over interest rates
in the economy, such as lending and
deposit rates.
More expansionary monetary policy, like a
reduction in the cash rate, typically stimulates
spending and inflation. Tighter monetary policy,
like an increase in the cash rate, typically
dampens spending and inflation.
If inflation is likely to be too high (low) for too
long, the Reserve Bank Board would typically
tighten (loosen) monetary policy, such as by
increasing (decreasing) the cash rate.
2-3%
%
%
%
3%
2%
Time
Inflation
MAYMAY
