Australia Rates Viewpoint: Primer: money markets and front-end rates in Australia 2026

Research evidence excerpt

Australia Rates Viewpoint: Primer: money markets and front-end rates in Australia 2026

Accessible version

Australia Rates Viewpoint

Primer: money markets and front-end rates

in Australia 2026

Primer

Key takeaways 07 July 2026

Rates Strategy• This primer discusses the structure of Australia's money markets and explains key

Australia

products in front-end rates in detail.

• We outline key drivers of price action in front-end rates, including bank regulation, Table of Contents

superannuation funds and RBA policy.

RBA and the Australian money market 2

• We also explore new developments like the mechanics of the RBA's shift from an

'excess' to 'ample' reserves regime. Liquidity and maturity transformation 2

The Diamond-Dybvig model 2

Money markets and front-end rates in Australia 2026 CentralRBA operationsbanking andin Australiathe central bank’s mandate 33

Australia’s money market has undergone significant change since 2019. Pandemic-era How does the RBA achieve its objectives? 4

policy continues to have consequences for market structure and prices, while structural How does the RBA use repo to achieve its policy

trends like the rapid growth of Australia’s superannuation fund complex and the RBA’s 4 objectives?

new ‘ample reserves’ system for implementing monetary policy are likely to continue to

RBA balance-sheet policy 5

play a decisive role in front-end, interest-rate pricing.

YCC/ BPP – how did it work? 6

Products, drivers and institutional participants Quantitative tightening – how does it work? 7

In this primer, we outline the role of the RBA in the Australian money market, key The future of balance-sheet policy 8

products, including repo, BOB, 6s3s, FX-SOFR and cross-currency basis swaps. We Products 10