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Australian economy - Assignment PDF

Added on - 07 Oct 2021

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AUSTRALIAN ECONOMY1
AUSTRALIAN ECONOMY
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AUSTRALIAN ECONOMY2
One of the main sentiments coming out clearly from the records of the previous minutes
is the decision by the members toleave the cash rate unchanged at 1.5percent. In its simple
definition, Cash rates are the interest rates which are set by Reserve Banks with an aim of
defining wholesale prices for overnight loans. Since they directly affect commercial banks, their
effects are also equally conveyed to customers in the respective banks when it comes to the
interest rates charged on borrowing (mortgages, loans, credit cards) and what they are paid on
their savings (term deposits, savings accounts) (Robinson and Wang, 2018, p.10). In
consideration to the decision by the board to leave the cash rate unchanged at 1.5%, the interest
rates will remain the same.
A graph showing how changes in Cash rates affect Interest rates
The first reason behind my conclusion on interest rates remaining the same is the decision
by the board members to maintain the country’s cash rate at 1.5%. Cash rates are among the
factors that play a major role in determining the interest rates charged by commercial banks. For
instance, if the cash rates increase, it implies that commercial banks will be paying higher
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