Consequently, where there has been an overall rise in the funding cost structure for intermediaries, the Board is able to set its cash rate target to appropriately take into account the effect on lending rates.
In the current environment, there has been ample scope to lower the cash rate sufficiently so as to bring these other rates to where they need to be to achieve the desired stance of monetary policy, be they mortgage rates or business lending rates. In this regard, it is important to stress that the transmission of monetary policy is still very effective in Australia.