Will the interest rate rises affect Australia’s resellers?

This month, as expected, the Reserve Bank of Australia (RBA) upped the interest rate and resellers are concerned according to the results of a CRN Online poll.

The recent CRN poll found that 67 percent of resellers believe that the interest rate rises will affect their business.
After its official meeting earlier this month, the RBA raised official interest rates to seven percent.

“The primary drivers have been the ongoing write-downs of credit exposures by major global financial institutions and increased concerns about the US and global economic outlook. Equity markets in the major industrial economies have fallen back to around their levels at the beginning of 2007, as has the Australian market. Emerging stock markets, which initially had been relatively resilient, have also experienced declines,” said an RBA statement after the rise.

The main responsibility of the RBA is to enforce monetary policy in Australia. The body oversees the stability of the currency of Australia, the maintenance of full employment in Australia, and the economic prosperity and welfare of the people of Australia.

The country’s interest rate is dependent on a number of factors around the state of the current economy.

RBA’s monthly meetings centre on if the cash rate should rise, fall or remain stable. Decision-making factors include the current inflation rate, unemployment, the consumer price index (CPI), the producer price index (PPI) and levels of retail sales.

You may be asking: how does this affect me? Interest rates are not necessarily just centered on home loans. The official cash rate determines how much interest is paid to the Reserve Bank by financial institutions to use the RBA’s money.

When your financial institution lends this out they do so at the interest rate they borrowed it at plus their margin. Lenders can determine their own loan interest rates, raising them when the cash rate rises and dropping interest rates when the cash rate is lowered.

We ask our channel experts what affect the interest rate rises will have on the channel?