RBA has set interest rates, but private banks like NAB have increased their own home loan rates above those set by the RBA. I would like to ask how is this possible? I know that the RBA sets interest rates by buying and selling bonds. Through arbitrage, bond interest rates affect other interest rates, such as home loan interest rates. Any difference can be arbitraged away. So then how is possible that private banks can raise rates above RBA rates? Can someone explain the economics behind this?