Briefly explain the nature of the open-market operation required to bring down the overnight cash rate by 25 basis points.
Based on the May Minutes, what were the main reasons behind the RBA’s move to cut the overnight cash rate? Use the aggregate demand-inflation (ADI) analysis to explain the likely effects of this rate cut on the Australian economy in the short and long run?
What is the effect of an inflation target on the position of the monetary-policy rule? Why does the RBA follow an explicit 2–3% inflation target rather than alternative rules?