The reserve bank of Australia through open market operations to bank regulation overnight interbank lending rates. Open market operation is divided into two parts: direct business have bonds, repurchase agreements. When the reserve bank to reduce overnight interbank lending rates, reserve bank of surplus capital market through overnight not intervene and open market operation to achieve this objective. Namely: buy bonds to increase the reserve bank of financial institutions in the transaction settlement funds to loan money to increase the overnight rate to decrease. When the reserve bank improve overnight interbank lending rates, reserve bank shortage of funds for overnight intervention by public and not improve market operation interbank lending rates. Namely: sell bonds to reduce the reserve bank of financial institutions in the transaction settlement funds-loanable fund and reduce the overnight rate goes up.
3. The Australian monetary policy on the influence of the real economy
Reserve bank through the open market operation adjustment overnight interbank lending rates to affect the economy. From March 2005 to May 2008, Australia price growth, lead to inflation continuing to rise. Reserve bank through the tightening monetary policy, seven times the overnight rate high, changed from 5.5% to 7.25%, and inflation from 4% to 2.35%. The process of transmission mechanism is: the reserve bank sell government bonds to reduce transaction settlement funds, loanable fund decline overnight interbank lending rates rise-and other interest rate rise and investment, consumption and net exports were down to reduce the level of economic growth, inflation decrease. In March 2008 to April 2009, when the U.S. subprime mortgage crisis affect the global economy, Australia a sluggish economy, reserve bank of expand monetary policy, six times lower overnight interbank lending rates, adjusted for 3% from 7.25%, and at the same time inflation also has rise up, from 2.35% up to 4.35%. Reserve bank through the buy government bonds-increase transaction settlement funds-loanable fund increase interbank lending rates, down-interest rate down to investment, consumption and net exports and increase the actual GDP, prices rise. At present, since April 2009 to November 2010, reserve bank once again raised interbank lending rates, adjusted for 4.75% from 3%, inflation rate dropped from 4.35% to 3.3%.
