Monetary Policy: The RBA & the Cash Rate

What this note covers

1. What monetary policy is and what the RBA is trying to achieve
2. The cash rate: the price that anchors every other interest rate
3. How the cash rate decision is made
4. Implementation: how the RBA makes the market rate equal the target
5. Policy stance: expansionary, neutral, contractionary (restrictive)
6. Worked application: choosing a stance and writing the chain of reasoning

6 sections · 14 key terms & formulas · 6 common mistakes