The Reserve Bank of Australia (RBA) may decide to reverse its monetary policy if the sub-prime mortgage crisis is not contained. While most economists expect the bank to raise the interest rates, such a development is far from certain to occur. Rory Robertson, interest rate strategist with Macquarie Bank, believes the RBA may cut interest rates if the US economic situation worsens in the coming months. One of the consequences of the sub-prime mortgage is a rise in the overall cost of funds for Australian banks and other financial institutions.
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