How the RBA makes interest rates decisions (Infographic)

The RBA has cut interest rates to a record low of two per cent, in line with the expectations of most economists surveyed by AAP.

While a surge in job ads in April was not enough to keep central bank from holding fire, the rates are unlikely go below two per cent for the foreseeable future.

Also read: What central banks around the world are doing with rates

Also read: What to do when interest rates change

So what does a rate cut mean for you, and how does the RBA make the rate decisions it does?

There are a number of moving parts that influence a rate call. They include inflation figures, commodity prices, strength or weakness of Aussie dollar and unemployment figures.

Comparison website RateCity has stacked up the key economic indicators that contribute to the decision each month.

“We looked at 17 economic indicators in an effort to understand what would be going on in the minds of the RBA’s board this week and found that several key indicators were pointing towards lower rates,” Peter Arnold, financial analyst at RateCity said.

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