Australia’s cash rate remains higher than those of several comparable economies after the Reserve Bank of Australia (RBA) left it unchanged at 4.35 per cent on Tuesday.
From reading that, I see our interest rate is higher than the other countries listed; but I wouldn’t say it ‘stands out’. But maybe I just don’t have an eye for what’s an impressively large interest rate.
The upshot as to why it is higher seems to be “shit’s complex, dude”.
Theoretically a higher interest rate makes the Aussie dollar higher, as it attracts money from overseas.
And a higher AUD decreases or suppresses our exports, as they become more expensive overseas. Conversely, imports become cheaper, and should increase.
But theory, oil inflation shocks,and a maniac slapping random tariffs on countries in the biggest economy in the world, doesn’t always follow the script.
