Bank to release cash review

The Reserve Bank says it will announce the result of its review of liquidity in the local money market tomorrow.

The central bank has twice this year raised the settlement cash level, or the amount left in the banking system each day, in pre-emptive steps to avoid any liquidity crunch caused by the heavy redemption of government bonds.

The bank reiterated that any changes would be purely technical and would not signal a change in monetary policy.

The settlement cash level was first raised to $500 million from $20 million in early February and then to $2 billion before the redemption of February 2006 bonds on February 15.

The maturity had been expected to reduce the amount of collateral available for banks to use to raise funds for their intra-day operations.

The Reserve Bank has held interest rates steady at 7.25 per cent since December and has said it expects to keep them there for the rest of the year.

- REUTERS