In particular, it is argued that the central bank will be biased towards a low interest regime in order to reduce the costs of sovereign debt even if it compromises its anti-inflation stance. A similar conflict may also distort the open market operations of the central bank. 42.
The experience here in Australia over many years is that this penalty of 25 basis points has been sufficient to ensure that there has not been excessive use of the central bank’s liquidity facility. The usage of this facility is published on the website with a small lag and recorded in the Bank’s Annual Reports in the chapter on Operations in Financial Markets.