Interest rates and inflation: why a rate change moves prices
Link the RBA cash rate to share, bond and currency prices in plain cause-and-effect terms.
Module 2 of 26, Why prices move, and why beating the market is hard. Lesson 6 of 6, about 18 minutes.
The takeaway
A rate rise makes future profits and fixed interest payments worth less today, so share and bond prices fall. Only surprise rate moves shift currency prices.
This page is a public summary. The full lesson has the worked examples, an interactive exercise and a short quiz, and sits in the course. Lessons 1 and 2 of Module 1 are free and the rest need a pass.
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