The following diagram show

the channel system of Cash Rate use by RBA. 

Suppose the cash rate is at the

policy target rate. 

In the below diagram, policy target rate equals i^T, IOR stands for Interest on Reserves, ES stands for Exchange Settlement funds.

The central bank knows that

there will be large inflow of funds to the government account at the end of

financial year due to payment of income tax from private sector. Assume that

before the change the supply curve for reserves is given by ES

1. 

2. 

3.