The bank is able to control the charge that is paid for cash by the purchase back of bonds or sale. The government, on the other hand, comes in here to provide securities (Felmingham 1995, p. 209). As the sale of purchased bonds affects money supply, the interest rate then changes and reflects its availability. This system has an indirect effect to the structure of rates of interest in the entire economy. Generally, RBAs method of trading in the money market to maintain the cash rate is seemingly better than if the federal government simply set the cash rate.
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