Monetary Policy (HSC SSCE Economics): Flashcards
📚Flashcards
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Practise the cards
10 cards from this deck
Cash rate
Cash rate
Interest rate on overnight loans between banks
ES accounts purpose
ES accounts purpose
Enable banks to settle payments with each other
Policy corridor floor (deposit rate)
Policy corridor floor (deposit rate)
0.25 percentage points below cash rate target
Policy corridor ceiling (lending rate)
Policy corridor ceiling (lending rate)
0.25 percentage points above cash rate target
Domestic market operations (DMO)
Domestic market operations (DMO)
RBA manages ES fund supply to keep cash rate at target
Tightening monetary policy
Tightening monetary policy
RBA raises cash rate target
Loosening monetary policy
Loosening monetary policy
RBA lowers cash rate target
Unconventional monetary policy
Unconventional monetary policy
Tools beyond main policy rate, used in extreme events
Transmission mechanism
Transmission mechanism
Process of policy changes flowing through economy
Interest rate channel
Interest rate channel
Lower rates reduce borrowing costs, boost spending