Does the Federal Election affect interest rates?

Interest RatesIf you find yourself asking this question, it’s time to learn the answer.

The lizard brain (quick) answer is: No. Stop listening to the fear tactics of politicians, and start thinking for yourself.

The brain surgeon (long) answer is: Interest rates are set independently by the RBA Board each month in response to economic conditions such as inflation, unemployment rate, global trade, property markets, currency fluctuations, and a crystal ball.

There is a small influence from the government in the fiscal and monetary policy such as stimulus into the economy. i.e. baby bonuses, pensioner handouts, first home owner grants. Generally speaking, we are in a time of political stability and there is not much difference in policy between the two major parties in Australia, and no radical sweeping changes that will change the nation, like a GSTax or floating the dollar.

So, if you were to ask us the question: Will interest rates be higher or lower if this party wins, the simple truth is interest rates will be the same despite who wins next month’s election.

For more info, read this article 21/07/10