Asset Prices & Wealth

A Channel in the Transmission Mechanism, it refers to how Interest Rates have a direct impact on Bond prices, and an indirect impact on house prices / share values, leading to Changes in perceived Household Wealth

Asset Prices are influenced by many factors

Interest Rate is not the only influence on Asset Prices, others including;

• Economic Confidence

🠱Cash Rate (Contrac) §

House Prices, and Share Portoflios fall in value as they become less attractive as the relative return of these assets decline.