I used to manage a money market operation for a major aussie bank. I can explain the fixed rate interest rate process.
The cash rate is set by the RBA as an interbank exchange settlement rate. Its the "offical rate" for risk free daily returns. The financial markets then base their rates on this...ie a margin generates a profit. The bank will offer 7 day, 30 day rates etc. One bank may need cash for the 7 days and another have excess cash.
The bank bill market is a very high volume market for setting rates of 30 days and beyond usually up to around 6 months. It is actively traded through natural bank bills (10-4pm) and futures (24hrs). Any variance between the "spot" market for bills and the futures is called arbitrage and it does occur but infrequently and is smoothed by the natural market.
Demand and supply forced set the actual 90 day bank bill and futures markets and economic data, exchange rates and interest rates in other economies influence the market. Longer term rates are synthetically generated by a "bank bill swap market" that creates a yield curve for longer term rates over 12ths, 2, 3, 5, etc years. It combines futures contracts of longer terms with phyisical settlement of bank bills. Short dated bonds also set the rates and variances between respective product markets is called arbitrage. The market fills those variances quickly so a consistency is created by other demand and supply forces. A margin is applied to this and thats where fixed term rates come from.
What occurs to the cash rate doesnt really influence term rates. However general direction of interest rates will. The shape of the long term yield curve constantly changes as does individual bank requirements over that term. eg A bank doing a 5 year lend may have less demand for more 5 year loans and so be less aggressive in its 5 year rate v's a nother bank that wants to fill its 5 year lending book.