Should we break it down?
Remember the days when the Reserve Bank of Australia met every Tuesday of the month to spill the beans on interest rates? We all do!
Now, we see a new era in 2024. Last year, the RBA announced that they will only convene 8 times a year instead of the previous 11. Mark your calendars for Feb, Mar, May, June, Aug, Sept, Nov, and Dec – those are the big days now!
We can wonder – Why the shake-up, ? The thinking behind it is all about giving the RBA board more breathing room to dive into economic waters. They need the extra time to weigh up all the factors before making any big moves.
Now, onto the big question – how will this affect interest rates? Will we see fewer changes or maybe even some rate reductions? Or could it lead to bigger swings in the infamous ‘cash rate’?
There are two schools of thought on this one:
- Some believe fewer meetings could mean fewer changes – especially if those changes are in our favour, like rate cuts!
- On the flip side, others worry that fewer meetings might mean bigger, more abrupt shifts in the cash rate. With less frequent assessments, there’s less room for gradual adjustments.
What’s your take on this? Are you team ‘fewer changes, please’ or team ‘watch out for those big swings’