T&S Asset Management

Lesson 4 of 7

From the policy rate to the household's instalment

When a central bank changes its policy rate, a borrower does not feel it at once. The change passes through money markets and banks' funding costs to the rates on new and existing loans, and only then to the instalment a household pays each month. How far and how fast it travels depends on how loans are priced.

Published 12 October 2026 Members

In this lesson

  • The chain from policy rate to instalment
  • Reference rates: what a loan rate is tied to
  • Fixed or floating, long or short
  • How much the instalment changes
  • Watching pass-through in the data