09 May 2022

How Often Does the Reserve Bank of Australia Change Interest Rates?

Reserve Bank of Australia

The Reserve Bank of Australia is Australia’s central bank. Therefore, they oversee the country’s economic policy. Plus, they keep an eye on how their decisions impact the economy. The RBA aims to keep Australia’s economy humming along. In addition, they aim to ensure that the currency remains strong. Therefore, they evaluate their monetary policy monthly. If policies have unexpected results, they will alter the cash rate. 

Australia has seen its share of economic turmoil. This led to the RBA’s creation in 1959. Thereafter, the economy has still seen extreme fluctuations. During the off-hours, banks and institutions continue completing transactions with each other. When the RBA establishes the cash rate, it impacts those transactions. If the RBA raises the cash rate, it impacts interest rates on mortgages eventually. When they lower it, it also impacts the rates on mortgages. Sometimes the changes benefit borrowers. Other times, it makes mortgages and home loans more expensive. 

The RBA understands that interest rates cannot become too expensive. Otherwise, the public will cease borrowing and spending with credit. This action can depress the economy and bring economic activity to a near halt. Therefore, the RBA does seek to maintain a balance between encouraging the public to borrow and helping lending institutions earn a profit. 

Reserve Bank of Australia and Interest Rates Conclusion

When the Reserve Bank of Australia makes changes to the cash rate, they impact the direction of home loan rates. Mortgage House is among the lenders that provide innovative solutions to clients. Therefore, we help our clients manage their interest rate expenses.

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