Reserve Bank of Australia (RBA)
19 hours agoThe Reserve Bank of Australia (RBA) serves as the central bank of Australia. It is responsible for conducting monetary policy, ensuring a robust financial system, and issuing the country's currency. The RBA's mission is to support the stability of the currency, promote full employment, and enhance the economic prosperity and welfare of the Australian populace. This is achieved by implementing monetary policy aimed at meeting a predetermined inflation target, maintaining a strong financial system and an efficient payments system, and issuing the nation's banknotes.
The RBA also provides specific banking services to the Australian Government and its agencies, as well as to several foreign central banks and official institutions. Additionally, it oversees the management of Australia’s gold and foreign exchange reserves. The “Commonwealth Bank of Australia” was established by legislation in 1911. In 1959, this original entity was reconstituted as the Reserve Bank of Australia (RBA) through legislation to continue central banking functions, while the commercial and savings banking roles were transferred to a new institution that retained the name “Commonwealth Bank of Australia.”
The Reserve Bank of Australia operates as an independent central bank, tasked with overseeing monetary, financial system, and payments system policies, along with other financial matters. The Bank is governed by two boards: the Reserve Bank Board, which is responsible for monetary policy and financial stability, as well as the Bank’s policies on all matters except payments system policy; and the Payments System Board, which focuses on payments system policy.
Reserve Bank Board
Decisions regarding monetary policy are made by the Reserve Bank Board, with the goal of achieving low and stable inflation over the medium term. This board is accountable for the Bank’s monetary and banking policy, along with its policies on all other matters, excluding payments system policy. The Governor, who manages the Reserve Bank, serves as the Chair of the Reserve Bank Board, while the Deputy Governor acts as the Deputy Chair.
Payments System Board
The Payments System Board is tasked with overseeing payments system policy. The Governor also chairs this board, with the Assistant Governor (Financial System) serving as the Deputy Chair.
Recommendation
R-Star
R-Star, often represented as r∗, signifies the "natural rate of interest." This concept is used in economics to denote the ideal interest rate for an economy. It reflects the rate at which the economy can grow at its maximum potential, characterized by full employment and stable inflation. R-star can be compared to the Goldilocks rate—neither too high nor too low. It indicates a balanced condition where the economy is functioning optimally—not too hot (which could lead to high inflation) and not too cold (which would cause high unemployment).
Rally
A rally is defined as a rebound in price following a period of decline. It represents a phase where the price of an asset experiences consistent upward movement. Typically, a rally occurs after a timeframe in which prices have remained stagnant or have decreased.
Range Trading
Trading ranges refer to periods when a financial instrument experiences sideways price movement, fluctuating within a defined price band. During such periods, the market lacks a clear trend, oscillating between support and resistance levels. Traders can capitalize on these price movements by implementing a range trading strategy. Let’s explore the concept of trading ranges and provide insights into successful range trading.
Range-Bound Market
A Range-Bound Market, often called a choppy market or noisy market, is characterized by price fluctuations that oscillate between a high and a low price.
Rate
The value of one currency expressed in relation to another currency.
Rate of Change (ROC)
The Rate-of-Change (ROC) is a technical indicator that quantifies the percentage difference between the current price and the price from x days prior. This indicator, often simply called Momentum, serves as a pure momentum oscillator.