What is the cash rate

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a) What is the cash rate? Provide a definition and its current value.

b) If there is an expected surplus of reserves in the banking system today, what will the Reserve Bank do?

c) What would happen to the cash rate if the Reserve Bank chose not to act?

d) Several central banks have used negative official interest rates in recent years, which until recently seemed unimaginable. Indeed, economists used to talk about a zero interest-rate boundary (ZIRB). How is it possible for a central bank to cut its official interest rate below zero?

e) Japan has the world's highest level of government debt. The interest rate (or yield) on 10-year Japanese government debt has been approximately zero for the past three years. What has made this possible? How is it related to quantitative easing?

Reference no: EM132489413

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