(7 October 2010 – Australia) Australia and New Zealand Banking Group’s (ANZ) chief executive, Mike Smith, has said that the Reserve Bank’s decision to keep interest rates steady will be short lived.The bank’s top boss said that he was surprised by the decision, but warned that all signs point to increases in the short-term.
We are still in an increasing rate environment and I think that as you saw by the central bank announcement yesterday, while they didn’t up rates, they certainly were anticipating there would be an increase in the foreseeable future,’ Mr Smith said.
Mr Smith also cautioned that the bank could not rule out a decision to lift interest rates independently of the central bank.
‘You never say never. We have to watch the situation and we continue to do that,” Mr Smith added.
Mr Smith acknowledged that banks were still struggling with the higher costs of borrowing.
‘We are paying about 160 basis points more on deposits than we were pre-crisis, and in mortgages we are only up about 100 basis points, so something has to give at some stage,’ Mr Smith said.