Monetary Policy Tools and Instruments
The CBA’s key policy rate (known as the refinancing rate) is the main interest rate that the CBA Board adjusts to achieve its price stability objective in the medium-term time horizon (learn more about Our Price Stability Objective). By raising or lowering the refinancing rate, the CBA aims to affect other interest rates in our economy, which, in turn, affect the behavior and decisions of economic agents (e.g. households, businesses, etc.). This impacts aggregate demand and inflation developments, serving to achieve the price stability objective (How Does Monetary Policy Affect Inflation?).
The CBA board makes decisions on monetary policy and sets the refinancing rate eight times per year, at fixed action dates. The respective Time Table of CBA Board’s Decisions for the following year is published at the end of November of each year on our website.
As part of the implementation of Monetary Policy, the CBA conducts regular open market operations. Under the Flexible Inflation Targeting (FIT) regime, the CBA’s operational target is short-term market rates. The CBA conducts open market operations primarily with its main repo instrument. The CBA may also rely on other types of market operations based on the needs of the financial markets and the operation’s expected effects on the economy.