Year 1 · March quarter Meeting 1 of 12

Cash Rate

Papers for the Reserve Bank board · a made-up economy that works like Australia's

This quarter

The figures change since last quarter in brackets

Staff forecast

The forecast only knows about news that has already happened. It can't see the next shock.

Your decision

Change the cash rate by

Your three years so far

Inflation over the year, % target band 2–3% CPI underlying
Unemployment rate, % about full employment, 4.5%
Cash rate, %

The numbers along the bottom are meetings. The red dotted line is the staff forecast.

Your three years on the board

What happened

The numbers along the bottom are meetings. 13 is where things stood after your last decision.

What this game showed

Think about it

  1. Which shock was hardest to deal with? Was it a demand shock or a supply shock?
  2. Pick one rate change you made. Through which channels did it reach spending and prices?
  3. Who gained and who lost from your decisions: borrowers, savers, exporters, people looking for work?

Same events again keeps the same shocks in the same quarters, so you can try a different plan and compare.

Cash Rate

You sit on the Reserve Bank of Australia's Monetary Policy Board for three years. Each quarter you read the news and the figures, then set the cash rate.

Your job

How it works

What you'll learn

The real board meets eight times a year. Here it meets once a quarter, so each meeting has new figures. The economy and its numbers are made up, and much simpler than the real one.

How to play

Read the headline and the figures, look at the staff forecast, then pick a change and press Announce the decision. The minutes explain what happens next. Press See next quarter's figures to move on. There are 12 meetings.

Words on the page

Cash rate
The interest rate on overnight loans between banks. The Reserve Bank sets a target for it, and other interest rates follow it.
Basis point
One hundredth of a per cent. 25 basis points is 0.25%.
CPI inflation
How much prices rose over the past year, from the Consumer Price Index.
Underlying inflation
Inflation with the biggest one-off price jumps taken out. It shows whether price rises are spreading. The RBA uses the trimmed mean.
Neutral
A cash rate that neither speeds up nor slows down spending. In this game that is about 1% above the inflation people expect.
Contractionary
A cash rate above neutral. Also called restrictive. It slows spending.
Expansionary
A cash rate below neutral. Also called accommodative. It speeds up spending.
Demand shock
News that changes how much people and businesses spend. Inflation and jobs move the same way.
Supply shock
News that changes costs or how much can be made. Prices rise while spending slows, so the goals pull apart.

Keyboard

Tab to move, the arrow keys to pick a change, Enter or Space to press a button.

Start again?

This game's decisions will be lost.