Understand that RBA interest rates have an effect -but the fact...

Understand that RBA interest rates have an effect -but the fact of the matter is, its not only that. Corporates (Like BNB) borrow money at BBSW/BBSY + a spread (premium). BBSY/W is b ased on the RBA's cash rate. However the spread reflects liquidity/risk in the market. WIth the credit crunch that spread went through the rough. It has come down heaps after last years disaster....So RBA has little effect. When I say that I mean if the RBA puts it up by 25 bps then the borrowing rate goes up say 30 bps....but if the market sees liquidity in the market drying and risk increasing - the spread can go up by as much as 150 bps in NEXT TO NO TIME...last year....the spread went up 120 bps over night ! that is very bad.....unreal economics really..showing how much fear there was in the markets...