Holidays are cheaper, thanks to the RBA. Here’s why |
If you’re reading this from an overseas destination – or planning to jet overseas these holidays – kudos, first of all, for keeping up with the news over the festive season.
If you’re among the more than one in three Australians with a mortgage, the past few months may have felt disappointing as the Reserve Bank refused to provide further relief after three rate cuts earlier in the year.
Credit: Illustration: Monique Westerman
In fact, RBA governor Michele Bullock might appear positively Grinch-like to borrowers after the bank’s last meeting when she made some of the clearest comments in her time as boss – that interest rates would probably only go one of two ways (at least for several months into the new year): up or sideways.
Those struggling under the weight of mortgage repayments may feel they’ve been served coal. And those with relatives or friends overseas might find there’s a little less appetite for their loved ones to visit Australia.
My Japanese uncle told me last week that while he’d love to visit me in Australia, he would have to wait until the yen was stronger against the Australian dollar because otherwise it would be too expensive to travel here.
While most people, including the media, tend to focus on how interest rates affect borrowers, the Reserve Bank’s actions also flow through the economy in other ways. Interest rates also affect exchange rates: how much the Australian dollar is worth compared to other currencies.
When the Reserve Bank lifts interest rates (with everything else staying the same: a condition economists........