When does reserve bank announcement take place

[Jom]

Hi all

This is a simple question but I can't seem to find the answer. I am aware that the Reserve bank is meeting again on 2 december and that it's expected that there will be an announcement of another rate cut.

My question is when the cut (assuming there is one) will actually take affect? Does it take affect as of the time of announcement? Or the next business day? anyone know?

 

[plusnq]

2.30pm

http://www.rba.gov.au/index.html

Cheers

Shane

 

[GoAnna!]

And the retail cut is of course when and if your bank decides to pass it on.....

 

[Jom]

2.30pm

http://www.rba.gov.au/index.html

Cheers

Shane

So it takes effect the moment of the announcement? ie 2:30pm

 

[Gremlin]

The Official Cash Rate, in theory, changes at the conclusion of the RBA Board meeting. In practice, it changes when announced at 2.30pm (since the market then knows about it).

Home loan rates are set by the retail banks (NAB, CBA, WBC, ANZ, etc). These change as and when the individual banks choose. It may be later that day. More likely it'll be from sometime between the following week and the end of the month.

 

[Jom]

When will this affect the treasury rate of an individual bank? The reason why i ask is that I have sold my home and it settles on friday 5th. It's a fixed rate loan so the break costs will be substantial (i got a break cost indicative amount today). I'm thinking that the break costs are likely to be even higher on friday 5th than they are now, given rates are likely to go down as of monday 1st. Do I understand this correctly?

Should I be trying to move settlement forward?

 

[Gremlin]

My understanding is that the break costs are priced off the yield curve. In that case, the break cost will already be factoring in the potential interest rate cut. So to my understanding, it shouldn't make that much of a difference (unless the IR movements are different to the market expectation).

Token Funder may have a more definitive answer though...

 

[Jom]

My understanding is that the break costs are priced off the yield curve. In that case, the break cost will already be factoring in the potential interest rate cut. So to my understanding, it shouldn't make that much of a difference (unless the IR movements are different to the market expectation).

Token Funder may have a more definitive answer though...

Thanks, i'll send token a PM