[Australia]: Reserve Bank of Australia Media Centre

[Owen]

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Official Cash Rate Target (Interest Rate):​

5.25%​

Overview​

The Reserve Bank of Australia (RBA) is Australia's central bank and banknote issuing authority. It has had this role since 14 January 1960, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank. Section 10(2) of the act, commonly referred to as the Bank's charter, states that the Bank's duty is "to ensure that the monetary and banking policy of the Bank is directed to the greatest advantage of the people of Australia" to be achieved by exercising its powers to contribute to: The stability of the currency of Australia; The maintenance of full employment in Australia, and The economic prosperity and welfare of the people of Australia. The bank's main policy role is to control inflation levels within a target range of 2-3%, by controlling the unemployment rate according to the 'non-accelerating inflation rate of unemployment' (NAIRU) by controlling the official cash rate. The NAIRU was implemented in most western nations after 1975, and has been maintained at a target of 5-6% unemployment. The RBA also provides services to the Government of Australia and services to other central banks and official institutions. The RBA currently comprises the Payments System Board, which sets the payment system policy of the bank, and the Reserve Bank Board, which sets all other monetary and banking policies of the bank. Both boards consist of members of the bank, the Treasury, other Australian government agencies, and leaders of other institutions that are part of the Australian economy. The structure of the Reserve Bank Board has remained consistent ever since 1951, with the exception of the change in the number of members of the board. The Governor of the Reserve Bank of Australia is appointed by the Treasurer and chairs both the Payment Systems and Reserve Bank Boards and when there are disagreements between both boards, the governor resolves them. The Reserve Bank Board will meet on the following dates in 2006 and 2007 to issue monetary policy decisions. The Board can call a special meeting at anytime if the economic situation desires it: 2 May 2006 6 June 2006 4 July 2006 1 August 2006 5 September 2006 3 October 2006 7 November 2006 5 December 2006 6 February 2007 6 March 2007 3 April 2007 1 May 2007 5 June 2007 3 July 2007 7 August 2007 4 September 2007 2 October 2007 6 November 2007 4 December 2007

Office:	Officeholder:	Image:
Governor of the Reserve Bank of Australia	Glenn Stevens, AC

Headquarters​

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Reserve Bank of Australia Building, Sydney CBD, New South Wales​

 

[Owen]

STATEMENT BY THE RESERVE BANK BOARD: MONETARY POLICY DECISION​

11 April 2006

At its meeting today, the Board decided to lower the cash rate target to 5.25 per cent and the interest rate paid on Exchange Settlement balances to 5.15 per cent. The economic situation in both Russia and India remains a highly volatile situation and a concern for global markets, including in Australia. Whilst Australia does not have a high level of economic reliance on either nation, the flow on effects to the global and Australian economy will be felt. The Reserve Bank Board has made the decision today to modestly lower the official cash rate target by 25 basis points in order to stimulate the economy in the face of global uncertainty. Inflation remains within the target band and the Board does not expect inflation to rise outside of the target band with this decision. The cash rate target being at 5.50 per cent was already deemed high by some economists standards, but is certainly not as high as it has been previously and instead has allowed for decisions to lower it to be made with a greater deal of confidence that it will not put undue burden on inflation. Despite the global uncertainty, Australia's economy remains strong. Australia maintains a highly educated and productive workforce and a high level of economic output in the services, industry, agricultural and mining sectors. This means that Australia is in a good position to sustain itself through any global economic uncertainty. Australian Government debt is low and sustainable and we urge the government to continue to maintain a sustainable level of debt in order to stimulate the economy through fiscal policy. Australia's economic prosperity would be boosted by a greater deal of free trade agreements to give market access to more Australian businesses in more global markets. We urge the government to consider signing more of these agreements with strong market-based economies but urge caution when signing these agreements with less stable or planned economies. Australia maintains a strong trading relationship with two strong economies: New Zealand and the United Kingdom, which has helped to alleviate the global economic impacts on Australia. The Reserve Bank Board will meet on the following dates (first Tuesday of every month besides January) in 2006 and 2007 to issue monetary policy decisions. The Board can call a special meeting at anytime if the economic situation desires it: 2 May 2006 6 June 2006 4 July 2006 1 August 2006 5 September 2006 3 October 2006 7 November 2006 5 December 2006 6 February 2007 6 March 2007 3 April 2007 1 May 2007 5 June 2007 3 July 2007 7 August 2007 4 September 2007 2 October 2007 6 November 2007 4 December 2007 ​