The Reserve Bank of Australia said bank-system reserves remain above potential demand as it transitions to an abundant-reserves regime. The RBA said it will supply sufficient liquidity while keeping market rates close to the cash rate. Domestic markets head David Jacobs said the new regime can flexibly provide any quantity of reserves the system requires while maintaining the cash rate near the central bank’s target. The RBA plans to move to the abundant-reserves system in 2024; under it banks’

The Reserve Bank of Australia said bank-system reserves remain above potential demand as it transitions to an abundant-reserves regime. The RBA said it will supply sufficient liquidity while keeping market rates close to the cash rate. Domestic markets head David Jacobs said the new regime can flexibly provide any quantity of reserves the system requires while maintaining the cash rate near the central bank’s target. The RBA plans to move to the abundant-reserves system in 2024; under it banks’ reserve needs will be met via open-market repo operations priced near the cash rate target using full-allotment auctions.