Monetary Policy

Monetary policy involves manipulating and controlling the price of money (cash rate or interest rate). The Reserve Bank of Australia is the central bank of Australia, and is the federal government's bank. The Reserve Bank operates independently of the Federal Government, to ensure there is no political pressure placed on the implementation of monetary policy. As an independent central bank, the Reserve Bank is accountable to the Parliament for its actions. Pursuant to the Reserve Bank Act 1959,  the Bank consults with the Australian Government and gives its annual report to the Treasurer, for presentation to the Parliament of Australia. The current Governor is Michelle Bullock.

In determining monetary policy, the Bank has a duty to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. To achieve these statutory objectives, the Bank sets monetary policy to keep inflation in the economy to 2–3 per cent and employment at the maximum level that is consistent with maintaining low and stable inflation. These objectives in turn facilitate strong and sustainable growth in the economy over the longer term.

Monetary policy decisions involve setting a target for the cash rate. The cash rate is the interest rate on unsecured overnight loans between banks. Since March 2020, the Reserve Bank has also set a target for the yield on 3-year Australian Government bonds.

Activities
A teaching activity is to focus on a current monetary policy decision is to copy the decision and its reasoning onto paper or word document, and have students deconstruct the reasoning. Activity Then get students to read the overview to read more deeply into the monetary policy decision: the analysis and the reasoning. Overview 
Alternatively, an activity could be designed around the Overview, requiring interpretation and evaluation. Link