Reserve Bank of Australia Rate Decision

Australia's central bank sets a target for the cash rate, the interest rate on unsecured overnight loans between banks. Following a major review of the institution, decisions are now made by a dedicated Monetary Policy Board that meets eight times a year over two days, rather than monthly as in the past. The statement goes out mid-afternoon Sydney time, and the Governor holds a press conference an hour later.

Four meetings each year coincide with the Statement on Monetary Policy, the bank's detailed economic outlook and forecasts. The mandate combines price stability and full employment, with an inflation target band. Because a large share of Australian mortgages carry variable rates or short fixed terms, changes to the cash rate pass through to household budgets unusually quickly, which is one reason the board has historically moved in smaller, more gradual steps than some peers.

The Australian dollar is heavily traded as a proxy for global growth and Chinese demand for commodities such as iron ore and coal, so a decision is often only part of the story for AUD/USD. Nonetheless, a shift in guidance about the direction of rates has tended to move the currency and three-year government bond futures sharply. Board unanimity or division, now reported in its statements, is scrutinised.

Minutes of each meeting follow two weeks later, and unattributed voting details are released with a delay. Quarterly CPI, the monthly CPI indicator and the labour force survey are the main local releases watched beforehand.