the cash rate

The official cash rate is an overnight interest rate and is the Reserve Bank of
Australia’s (RBA’s) key monetary policy lever. The RBA conducts open market
Operations (buying and selling Commonwealth government securities) to maintain the cash rate at its pre-specified target level.

All other money market and bond market rates are related to the cash rate after allowing for maturity risk, credit risk and interest rate expectations.

The cash market is a market for the deposit and lending of funds overnight. Banks, financial institutions and large companies will deposit any surplus cash in the market in order to earn interest.

The interest rate on these funds (i.e. the cash rate) is determined by the demand + supply for funds.

The demand for cash is determined by the reserves of cash (exchange settlement funds) held by banks in their Exchange Settlement Accounts (ESAs) with the Reserve Bank.

These funds are used on a daily basis by the banks in settling transactions ...