October 19, 2015

Australian Markets Weekly: Independent interest rate increases

In this weekly, we consider the implications for monetary policy of last week’s independent mortgage rate increases by Westpac. RBA expected to watch how other intermediaries respond to the move and to assess how the move impacts the economy.

In this weekly, we consider the implications for monetary policy of last week’s independent mortgage rate increases by Westpac.

In brief, there seem to be some important differences to the circumstances in 2012 when banks previously raised lending rates independently of the RBA, which suggest caution about assuming an automatic or near-term offsetting monetary policy response by the RBA. At the very least, we would expect the RBA to watch how other intermediaries respond to the move and to assess how the move impacts the economy, suggesting no early move in response.

For full analysis, download report:

•   Australian Markets Weekly: 19 October 2015 (Word, 282KB)

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