BEO2000 Lecture Notes - Lecture 5: Australian Dollar, Fractional-Reserve Banking, Money Supply
Document Summary
Lecture 5: monetary policy implementation: beo2000 financial institutions & monetary theory, primary source, hubbard et al. 16, essentials of economics: with respect to learning outcomes, you should be able to: The rba formulates and implements monetary policy: conducted in a transparent manner to reduce uncertainty. The main goal of monetary policy has been revised to focus on inflation. Inflation target of 2 3 per cent, on average, over the medium term: at this target range: Inflation preserves the value of money: encourages strong and sustainable growth in the economy over the longer term. Inflation targeting: australian inflation: 1950-2017: monetary policy: cash rate, monetary policy decisions involve setting the cash rate, cash rate is the interest rate on unsecured loans overnight loans between banks. Short-term interest rates, australia, 1985-2017: monetary policy: cash rate, cash rate determined by supply and demand of exchange settlement funds (esf). To reduce the cash rate, the rba publicly announces that it intends to do so.