interest rates (1 Viewer)

[osak23]

hi
can someone explain why the reserve bank by purchasing securities will put pressure on the market to decrease interest rates?

and also do you have to pay admin fees as a private company to apply to become public company?

 

[enoilgam]

On the first point, when the government purchases securities they are increasing the supply of money on the market (they need to pay for the securities). As a result, this will decrease the costs of borrowing money (i.e. interest rates). Thats a bit simplistic, but thats what happens in a nutshell. Not too sure on the second question.

 

[seremify007]

I think enoilgam's response is sufficient for a high level explanation on how the RBA executes monetary policy and either purchases/sells securities to increase or decrease the supply (or availability) of cash. That being said, as evidenced by big banks no longer following the RBA cycle in interest rates, this is having less and less of an impact on lending activity compared to a decade ago.

To answer your second question osak23, I am not really sure to be honest. The challenge in answering your question is whether you mean broadly moving from private to public, or in an Australian specific context where private (i.e. proprietary) companies fall into two categories depending on various financial and non-financial criteria. Can you be more specific in your question? I'd need to search on ASIC but I presume there are fees involved as ASIC do charge fees when lodging forms.

 

[OzKo]

You may want to see what the RBA have on their website as well.

http://www.rba.gov.au/about-rba/our-role.html