Reserve Bank of Australia - Monetary Policy Framework

The Reserve Bank of Australia is responsible for Australia's monetary policy. Its monetary policy objective is defined as an ‘inflation target’ of consumer price inflation of 2-3 per cent, on average, over the medium term. To meet this, the Bank influences interest rates in the economy by setting a target for ‘the cash rate’. Influencing interest rates in this way affects the behaviour of borrowers and lenders, economic activity and ultimately the rate of inflation.