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Hi all


Thought it would be good to start a discussion on the RBA domestic market operations.


This was released by them this morning... and its another way of injecting some more liquidity into the system









Over the past decade, the Reserve Bank has gradually widened the range of securities which it is prepared to accept under repurchase agreements, to take account of the changing structure of financial markets. The current list of securities acceptable for repurchase agreements includes Commonwealth Government securities, securities issued by State and Territory borrowing authorities, securities issued by certain supra-national and foreign government agencies and bills and CDs issued by some Australian banks.

As a continuation of this trend, and after reviewing the range of international practice by other central banks, the Reserve Bank has decided to further widen the range of securities eligible for its repo operations. The new arrangements will be implemented in two stages.

From Monday, 17 September, the list of eligible securities for repos will be expanded to include:

bills and certificates of deposit issued domestically by any authorised deposit-taking institution (ADI) which holds an Exchange Settlement (ES) Account at the Reserve Bank. The remaining term to maturity of these securities, as at present, must be no more than 12 months; and
Australian dollar bonds issued by an ADI which holds an ES Account and is rated A3 or above by all major credit ratings agencies that rate it, and in any event, by at least two such agencies. Subordinated and structured securities will be excluded.
From Monday, 8 October, the list of eligible securities will be further expanded to include:

Australian dollar residential mortgage-backed securities (RMBS) backed by prime, domestic, full-doc residential mortgages and rated AAA or equivalent; and
Australian dollar asset-backed commercial paper (ABCP) backed by prime, domestic, full-doc residential mortgages (either directly or in securitised form) and rated P-1 or equivalent.
Between now and Monday, 8 October, the Reserve Bank will consult with market participants about the operational aspects of these latter two forms of security. Further details will be made available on the BankÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s website closer to 8 October (refer to http://www.rba.gov.au/MarketOperations/Dom...ecurities.html).

The Reserve Bank will continue to deal only in securities lodged in Austraclear. As at present, a repo counterparty will not be able to offer securities issued, or supported, by itself or a related party.

Approaches for repos in the various forms of securities will be considered separately. Market participants will therefore need to indicate, when they approach the Reserve Bank, the type of securities they propose to offer under the repo. As is current practice, the Reserve Bank will retain discretion on the classes of securities that it will accept for open market operations each day. However, all classes of securities will be acceptable on an intra-day or overnight basis.

The margin on each repo transaction will vary with the type of security:

For securities issued by the Commonwealth Government, State and Territory central borrowing authorities, supra-national organisations, foreign government agencies and bills and CDs, the margin will be 2 per cent (as is currently the case).
For Australian dollar bonds issued by an ADI holding an ES Account and rated A3 or above, the margin will vary with the maturity and credit rating as follows:

Margins for Bank Bonds by Time to Maturity and Credit Rating
Percentage of market value of security
Time to Maturity 0-1 years 1-5 years 5-10 years > 10 years
AAA-Aa3 2.0 4.0 6.0 8.0
A1-A3 2.0 5.0 7.0 9.0

For RMBS and ABCP, the margin will be 10 per cent.



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  • 1 year later...

everyone is predicting the RBA will cut 50 pts today,i think they might go for another 100 pts cut today.


News from the US overnight was very discouraging with sales of new cars and suspect our market is softening very sharply as well.


100 pt cut would be perhaps a little aggresive but i believe we are heading to 3% official rates and quickly

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Very interesting that in todayÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s RBA release they make the comment that they are happy with the extent that the banks are passing on rate cuts to borrowers :weirdsmiley:



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Reserve Bank's interest rate policy has already been exerting some restraint on the economy for a while, according to the Reserve Bank governor, Glenn Stevens.


Speaking at the Economic Society of Australia luncheon in Brisbane he said the RBA's most recent analysis concluded that the

underlying rate of inflation is more likely to rise than fall over the next couple of years.


"This central expectation - subject to all the usual uncertainties inherent in forecasting - suggests, as we said at the time, that 'further tightening of monetary policy is likely to be required at some point for inflation to remain consistent with the 2-3 per cent

medium-term target'," Mr Stevens said.


"It remains, though, a matter for judgement by the board as to whether that point has been reached. "At its most recent meeting, the board's view was that it had not been.


"New information will, as always, be important in our monthly assessments of what monetary policy needs to do. As far as prices are concerned, we will get another comprehensive round of data in late July."

so ..... more for tightening than not, but when?? too inscrutable. any possible rise looks to be further away than previously anticipated (but you never know)



Or am I reading it the wrong way - another report:

The Australian dollar climbed more than a third of a US cent after the central bank reaffirmed more interest rate rises could be on the way.On Wednesday, Reserve Bank of Australia (RBA) governor Glenn Stevens said the most recent analysis suggests underlying inflation was more likely to rise than fall over the next couple of years, and rate rises would be necessary at some point.


At 1257 AEST, prior to Mr Stevens' comments at 1300 AEST, the local unit was trading at 106.71 US cents. It shot to 107.07 US cents, shortly after his upbeat comments.


Mr Stevens said the RBA board's view at the last monetary policy meeting earlier this month was that a rate rise was not needed yet. "New information will, as always, be important in our monthly assessments of what monetary policy needs to do," he said in a speech in Brisbane on Wednesday.

those damn tea leaves
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