Definition: This is the interest rate paid by Australian banks on the overnight money market.
Description: The OCR essentially determines the cost of borrowing money in Australia. The Reserve Bank of Australia uses open market operations (the buying and selling of government securities) to hit their OCR target.
Influence: High interest rates lead to a decrease in lending and trigger an increase in consumer savings, causing a slowdown in economic growth. A rise in the OCR usually leads to an increase in capital flowing into Australia and provides a boost for the Australian dollar in the medium term. However, if the increase in rates is not accompanied by rapid economic growth, this may lead to economic stagnation and have a negative impact on the Australian dollar in the long run.
Market Impact: High
Released: Released monthly (except in January) on one of the first days of the month at 04:30 GMT
Source: Reserve Bank of Australia