Open Market Operations in Australia: A U.S. Perspective

This paper investigates open market operations in Australia and incorporates some key features of these operations into a simple rational expectations macroeconomic model. Where relevant, comparisons with U.S. operating procedures are made. The major finding is that the Reserve Bank of Australia like the Federal Reserve appears to focus closely on overnight interest rates in implementing its monetary policy. Specific features of the Australian money market imply that direct control of the interest rate would be a more efficient policy in Australia than in the United States.