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Rates that stop the nation stay on hold

5 November 2013

The Reserve Bank of Australia (RBA) has today kept interest rates on hold at 2.5 percent for the third consecutive month, following the August rate cut that saw rates reduced to their 53 year low.

The RBA decision comes as the National Farmers’ Federation (NFF) releases its Agribusiness Loan Monitor for October, which shows all lenders mirroring the RBA’s decision to keep rates on hold, after all dropping rates by 0.25 basis points from August to September.

Duncan Fraser, President of the NFF, said it was very positive – and quite rare – to see that all lenders had passed on the RBA’s August rate cut in full.

“For the first time since we created the NFF Agribusiness Loan Monitor in June 2011, all eight banks tracked have passed on the RBA’s interest rate cut in full, and within two months of the rate cut being made,” Mr Fraser said.

“There have been eight interest rate cuts made by the RBA since the Monitor was first introduced, so it is extremely welcome to finally see all the banks responding by passing on a rate cut in full – and we urge them to keep this up should the RBA cut rates again over the coming months,” Mr Fraser said.

Mr Fraser said the decision by the banks to pass on the August rate cut in full would help farmers, many of whom are currently facing a number of challenges.

“Seasonal conditions have varied remarkably across the country, resulting in difficult circumstances for some farmers and sectors. Some areas are really struggling at the moment, so this movement from the banks will certainly help to ease financial pressures,” Mr Fraser said.

“Extremely dry conditions continue to plague much of QLD, the NT and northern NSW, with a return to drought a reality for many, while WA, VIC and SA have received quite a bit of rain, which has pushed back wheat harvest in some areas.

“Meanwhile, southern NSW experienced severe frost events in October, damaging cereal crops, and other parts of NSW battled fires in a very early start to the annual bushfire season.

“Fluctuations in seasonal conditions have also been reflected in commodity prices, with wheat and beef prices up, but lamb and cotton prices down, while the Australian dollar continues to gain strength.

“Farmers operate in an unpredictable environment, which is why it is so critical that financial lenders provide the certainty of passing interest rate cuts on in full,” Mr Fraser said.

The NFF October Agribusiness Loan Monitor is available via the NFF website here.The Monitor is compiled each month by leading money market monitor Canstar and published by the NFF as a tool for all Australian farmers.

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