Interest rate question

[Andre]

A question for those with more knowledge. Are the Reserve bank constrained to only raise interest rates in 0.25 percent multiples?
For instance if it's a borderline call why can't they (say) raise or lower rates by a smaller margin? 0.1 percent or the like earlier, then wait two or three months and have to raise (or lower) by more?

 

[Qsaint]

I think its a convention; in currency excange 1 basis point is the smallest movement. 25 Basis points eg 0.25% may be the smallest Increment

 

[Timmy from Thomastown]

They can do whatever they like. In fact they dont even have to announce the official interest rate - they can let the market find its own level, which is what they did 15-20 years ago. But these days they like to be transparent. 25 points is considered a high enough move to have an effect on the economy without disrupting it too much. They could easily do 50 but 10 or 15 is unlikely.