IN THIS SECTION:
Banks warned not to be too eager to raise rates
3 November 2009
TODAY’S official Reserve Bank of Australia (RBA) interest rate hike of 0.25% will be a bitter pill for Australian families, made all the harder to swallow for mortgagees and small businesses should the banks be over-zealous in passing on the full rise to customers, according to the National Farmers’ Federation (NFF).
“With the RBA taking an impatient stance and not waiting to gauge the full impact of the 0.25% increase it imposed in September, the banks will be chomping at the bit to pass on today’s full rate increase,” NFF Vice-President Charles Burke said.
“But we should remember that not too long ago many banks failed to pass on interest rate cuts in full. I recall they cited a plethora of reasons why cuts could not be passed on in full, surely the same arguments hold true when it comes to increases?
“Last month’s 0.25% official rate rise saw the banks almost fall over themselves in passing on the full amount to their customers, such was the speed and absolute certainty they displayed in needing to lift rates. While I won’t be holding my breath, the banks should be mindful that it’s not a good look to be so eager to slug customers.
“This raises another bugbear for consumers, the lack of transparency. For farmers, as with other small businesses, it is simply too hard to accurately keep abreast of, and monitor with any certainty, the interest rates being offered by banks and other financial institutions.
“Until the rate change decisions of banks and others are required to be lodged and publicly reported, customers will continue to be left in the dark.
“This lack of transparency acts as a disincentive for banks and others to actively, let alone aggressively, compete across the full range of loans, which inevitably thwarts the RBA’s intended market responses to monetary policy changes.”
Media Enquiries: Brett Heffernan on (02) 6273 3855 or 0408 448 250.
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