(9 February 2012 – Australia) It is time for Australian banks to make the tough choice – lift their interest rates and they will hurt the economy, keep mortgage rates where they are and take a hit in the pocket.The Reserve Bank of Australia (RBA) kept rates on hold this month amid demand for loans waning and overseas funding cost rising – the banks may be forced to lift rates independently to claw back profits.
Banks had already warned in the weeks before the RBA announcement – the cash rate was left at 4.25 percent – that they may begin setting their interest rates independently.
Bankers have argued that a healthy banking sector has helped steer Australia clear of the bailouts and recessions seen in the US, UK and Europe since 2008 when the financial crisis first emerged. Australia’s big four banks recorded profits of A$24.3 billion last year.
The decision by ANZ and Bendigo Bank to announce rate changes outside the RBA’s monthly meeting has also contributed to household uncertainty over mortgage rates.