Reserve Bank of Australia (RBA) Feed Items

Opening Statement by Michele Bullock, Governor, to the House of Representatives Standing Committee on Economics. This speech is being broadcast live.

At its meeting today, the Reserve Bank Board decided to lower the cash rate target by 25 basis points to 4.10 per cent and the interest rate paid on Exchange Settlement balances to 4 per cent.

Using Australian tax and survey data, we exploit discrete eligibility cut-offs to estimate the effect of several business investment tax breaks, including tax credits and instant asset write-offs, implemented over the past 15 years. Policies implemented during the global financial crisis increased investment. Responses are larger for unincorporated businesses, possibly reflecting reduced efficacy of investment stimulus under Australia's dividend imputation system. However, we find mostly no evidence of an effect for other investment policies, including those implemented to address the COVID-19 pandemic.

Craig O’Hagan has been appointed as the Head of Audit at the RBA.

At the RBA, Sarah Brown has been appointed as the Head of Banking.

The Reserve Bank of Australia welcomes the appointment of new members to the Governance Board and Monetary Policy Board.

Speech by Sarah Hunter, Assistant Governor (Economic), University of Adelaide South Australian Centre for Economics Studies (SACES) Lunch.

Speech by Brad Jones, Assistant Governor (Financial System), AusPayNet Summit 2024.

Speech by Andrew Hauser, Deputy Governor, The Australian Business Economists’ Annual Dinner.

Foreign or global economic and financial shocks can be significant drivers of economic outcomes in small open economies such as Australia, and are therefore a considerable source of uncertainty to the Australian economic outlook. Examining the extent to which global shocks affect the Australian financial system and economy and the channels through which these shocks operated over the 1990–2019 period, we find that global shocks drive considerable variation in the exchange rate and the cash rate, but a smaller proportion of variation in economic variables like real GDP. This suggests that, over our sample, the exchange rate and domestic monetary policy have effectively buffered the Australian economy from global shocks. Unlike some other recent literature on global spillovers, we do not find the Australian banking system to be a substantial channel of financial and economic spillovers to Australia.

At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.25 per cent.

This paper provides a comprehensive analysis of the costs of job displacement in energy-intensive industries in selected OECD countries. Based on harmonised linked employer-employee data from 14 OECD countries, we estimate the effect of job displacement in three energy-intensive industries, namely energy supply, heavy manufacturing and transport, compared to other industries. We find that workers displaced from energy supply and heavy manufacturing, experience larger earnings losses compared with workers in non-energy-intensive and transport sectors. Larger earnings losses mainly result from weaker re-employment outcomes in terms of wages and job instability but also challenges with finding another job. They reflect significant differences in the composition of workers and firms in energy supply and heavy manufacturing and the rest of the economy. Displaced workers in these sectors tend to be older, are less skilled and more likely to be previously employed in high-wage firms.

Speech by David Jacobs, Head of Domestic Markets Department, to the Australian Securitisation Conference.

Speech by Michele Bullock, Governor, at the Committee for Economic Development of Australia (CEDA) Annual Dinner. This speech is being broadcast live.

The RBA controls short-term interest rates by offering to lend as many reserves as banks demand at a rate close to its target for monetary policy. At this rate, banks' demand drives the amount of reserves the RBA supplies and subsequently the size of its balance sheet. I estimate a substantial increase in Australian banks' reserve demand since the COVID-19 pandemic. I find an increase in banking system deposits explains a large part of the increase in reserve demand through an associated shift to the right in Australian banks' reserve demand curve. The link between deposits and reserve demand suggests banks are willing to pay for the convenience of holding additional reserves to manage payments between depositors, or that banks hold reserves against deposits as a precaution in case of liquidity stress. The value of collateral also shifts banks' reserve demand curve as it changes the price at which banks can fund reserves through the repo market. The role of collateral in explaining the increase in banks' reserve demand is likely small as its value is little changed since the pandemic.

At its meeting today, the Payments System Board discussed a number of issues, including assessment of the New Payments Platform, the RBA’s work to operationalise the Financial Market Infrastructure regulatory reforms, central clearing of Australian bond and repo markets, the annual review of compliance with card payments regulation, improving the security of card transactions in the online environment and enhancing cross-border payments.

Speech by Christopher Kent, Assistant Governor (Financial Markets), at the Sir Leslie Melville Lecture, Canberra.

Assistant Governor (Financial System) Brad Jones discusses the Payments System Board’s strategic priorities, and financial stability.

The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) today published a consultation paper which seeks industry feedback on a new research initiative, Project Acacia.

At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.25 per cent.

Dr Meredith Beechey Österholm has been appointed to the new role of Head of Monetary Policy Strategy and Ms Nazmiye (Naz) Guler has been appointed Head of the Future Hub at the Reserve Bank of Australia.

The Bank for International Settlements (BIS) and its central bank partners have successfully demonstrated with Project Mandala that regulatory compliance can be embedded in cross-border transaction protocols.

Speech by Sarah Hunter, Assistant Governor (Economic), Citi Australia and New Zealand Investment Conference.

This paper explores the formation of households' wage and inflation expectations using a common dataset and framework, documenting a number of stylised facts. We find that households tend to form wage and inflation expectations somewhat differently. Households associate higher wages growth with good economic outcomes, but higher inflation with worse economic outcomes. Wages expectations also tend to be somewhat more forward looking, while inflation expectations are more backward looking, especially for lower income households, and place a disproportionate weight on past fuel prices. These findings paint a picture of households having a somewhat 'supply-side' view of inflation, where shocks that push up inflation also weaken the economy, but a more 'demand-side' view of wages, where shocks that push up wages also strengthen the economy, which may make communication of monetary policy and the outlook more challenging.

The Reserve Bank of Australia (RBA) is commencing its Review into Retail Payments Regulation.

The Bank today released the Reserve Bank Board’s Review of the Term Funding Facility.

Speech by Christopher Kent, Assistant Governor (Financial Markets).

Speech by Andrew Hauser, Deputy Governor, at the Business Journalism Awards.

Media release number 2024-19: The Reserve Bank of Australia today released the 2024 Assessment of the ASX Clearing and Settlement Facilities. This assesses the performance of the ASX CS Facilities against the Bank's Financial Stability Standards.

At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.25 per cent.

Occupational entry regulations (OER) are legal requirements that people need to meet to enter certain professions. They are intended to protect consumers by ensuring providers are of sufficient quality – but they can also create costs by making it harder for new workers to enter a profession or for new firms to open and grow. In this paper we construct a database of OER stringency across three states and a number of occupations to better understand these potential costs. We find that for services provided to consumers (businesses), OER tend to be more (less) stringent in Australia compared with the average OECD country. In most occupations OER are more stringent in Australia compared to the least stringent OECD country. We find that more stringent OER are associated with lower business entry and exit rates, and a slower flow of workers from less to more productive firms, both of which may have negative implications for productivity. We also find some tentative evidence that OER tend to be associated with skill shortages. These results do not necessarily suggest that OER should be less stringent. But they fill a gap in our understanding of the effects of OER, which can help policymakers going forward.

Speech by Brad Jones, Assistant Governor (Financial System), at the Intersekt Conference.