Overall, data suggests that the pass-through from policy rate changes to bank lending rates has been slow and muted. This lack of adequate monetary transmission remains a key policy concern for the Reserve Bank as it blunts the impact of its policy changes on economic activity and inflation.
Since the deregulation of interest rates in the early 1990s, the Reserve Bank has made several attempts to improve the speed and extent of the monetary pass-through by refining the process of setting lending interest rates by banks, while at the same time imparting transparency to borrowers and flexibility to banks in the process of interest rate setting.