Market Operations
In March 2024, the Reserve Bank endorsed a plan to move to operating with ample reserves for its future system for monetary policy implementation. In April 2025, the Reserve Bank announced several changes to its market operations to support the transition to the ample reserves system. For more information, please see Christopher Kent's keynote speech The RBA’s Monetary Policy Implementation System – Some Important Updates.
The Reserve Bank transacts in domestic financial markets to implement monetary policy decisions and facilitate the smooth functioning of the payments system.
Conventionally, an important aspect of implementing policy decisions involves the Reserve Bank transacting in domestic financial markets in its open market operations to keep the operational target for monetary policy – the cash rate – consistent with the target rate set by the Monetary Policy Board. The cash rate is the interest rate on unsecured overnight loans between banks.
The Reserve Bank also undertakes transactions in the foreign exchange market on a regular basis. Many of these transactions arise out of the provision of foreign exchange services to clients, with the Australian Government the Bank’s largest client. The Reserve Bank manages Australian dollar liquidity through foreign exchange swaps as necessary. Transactions are also undertaken in the foreign exchange market, as well as foreign asset markets, in managing Australia’s foreign currency reserves. Foreign currency reserve assets are held on the balance sheet of the Bank, with the currency allocation, asset allocation and interest rate risk on investments managed against benchmark targets. Foreign currency reserves are deployed from time to time to effect policy operations in the foreign exchange and domestic cash markets.