Monetary Policy

Monetary policy involves manipulating and controlling the price of money (also known as interest rates). The Reserve Bank of Australia is the 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.

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.