Research Discussion Paper – RDP 9504 The Link Between the Cash Rate and Market Interest Rates

Contents

• Introduction
• The Operation of Monetary Policy
• The Pass-Through of Changes in the Cash Rate
• What Determines the Degree of Pass-Through?
• Conclusion
• Appendix 1: Unit Root Tests
• Appendix 2: Data
• References

An earlier version of this paper was prepared for the autumn meeting of central bank economists held by the Bank for International Settlements on 16–17 November 1993. I am indebted to Geoff Shuetrim and Nick de Roos for invaluable research assistance and to colleagues at the Reserve Bank of Australia for comments and discussion. The views are those of the author and are not necessarily those of the Reserve Bank of Australia.