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Finance & Accounting
Pages 6 (1506 words)
Capital The global economic development has slowed down in the recent months in 2012. Anxiety regarding the banking and fiscal problems in the Euro segment is increasing the pressure on the global economy. The recent data suggests that the economic activities have contracted in Europe.
The prices of the Australian goods exports have decreased since May, due to the decrease in the price of crude oil, iron ore, etc. The Australian dollar price has appreciated over three months, despite the deterioration in the global economy and fragile financial condition. This study aims at evaluating the decision of Reserve Bank of Australia (RBA) for not changing the cash rate until December. The implications of cash rate in the economy of Australia, its effect and the effect of probable changes in the cash rate are also important issues that would be discussed in the study. The motive is to forecast the decision of RBA regarding changing the cash rate. Like the central banks in the industrialized countries, the RBA also utilizes interest rate on short-term basis, as an operating instrument in order to implement monetary policy. Under the current policy, the RBA has set a monetary policy by allotting a level of target for cash rate. RBA has been quite successful in achieving the cash rate as per its target level. The payment system of an economy represents the system by which the different agents settle their transactions. ...
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