The Reserve Bank of Australia (RBA) is Australia’s central bank, which was continued in existence under, and derives its functions and powers from the Reserve Bank Act 1959. Its duty is to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. It does this by setting the cash rate target to meet an agreed medium-term inflation target, working to maintain a strong financial system and efficient payments system and issuing the nation’s banknotes. The RBA provides certain banking services as required to the Australian Government and its agencies, as well as to a number of overseas central banks and official institutions. Additionally, it manages Australia’s gold and foreign exchange reserves.
The cash rate target is set by the Reserve Bank of Australia. By adding or withdrawing liquidity to the overnight loan market, the RBA can ensure the target rate is the rate at which banks lend unsecured funds to each other overnight. Decisions regarding the cash rate target are made by the Reserve Bank Board and explained in a media release announcing the decision at 2.30 pm after each Board meeting.