The bank sometimes uses the phrase “policy measures” to describe adjustments to its “policy rate”, the so-called cash rate from which most other rates are priced.
Two weeks ago it cut the cash rate to 0.50%, a record low that is only 0.25 points above what Governor Philip Lowe has described as the effective lower bound of 0.25%, beneath which the bank would need to engage in “unconventional monetary policy” which would involve buying government bonds, residential mortgage bonds and perhaps corporate bonds to force a suite of longer-term interest rates lower.
At Thursday’s announcement Governor Lowe is also likely to take the opportunity to set out in detail how unconventional measures would be applied.
Reserve Bank cash rate
- ^ further policy measures (www.rba.gov.au)
- ^ effective lower bound (www.rba.gov.au)
- ^ unconventional monetary policy (www.rba.gov.au)
- ^ at least the next 12 months (www.rbnz.govt.nz)
- ^ to zero (www.cnbc.com)
- ^ Now we know. The Reserve Bank has spelled out what it will do when rates approach zero (theconversation.com)
- ^ Council of Financial Regulators (www.cfr.gov.au)
- ^ deterioration in liquidity (www.cfr.gov.au)
- ^ We're staring down the barrel of a technical recession as the coronavirus enters a new and dangerous phase (theconversation.com)
- ^ Tax Office (www.ato.gov.au)
- ^ This coronavirus share market crash is unlike those that have gone before it (theconversation.com)
- ^ announced on Sunday (theconversation.com)
Authors: Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University