The Reaction of the Australian Stock Market to Monetary Policy Announcements from the Reserve Bank of Australia

Abstract

The aim of this paper is to explore the impact of monetary policy decisions by the Reserve Bank of Australia on the Australian stock market. We find some evidence that equity prices are negatively impacted by unexpected changes in the target cash rate. The result is generally consistent with existing studies that use US data in the analysis. We show that the stock market does not react to raw changes in the target cash rate, the expected component of raw cash rate changes, and the release of the explanatory meeting minutes.