(15 October 2010 – Australia) The Commonwealth Bank of Australia’s chief executive officer Ralph Norris has said that Australian banks will raise interest rates above the official Reserve Bank cash rate.Speaking at the Committee for Economic Development of Australia in Sydney, Mr Norris said that there is no doubt that when banks look at current funding costs, rates will rise.
Despite confirming homeowners’ fears, Mr Norris refused to speculate when, or by how much, banks would raise rates.
Mr Norris said at the committee meeting that he believes it is a situation until we see some sort of normality get back into markets, but I don’t see that happening quickly.
Markets currently are volatile, there’s a lot of issues and problems with sovereign debt in different parts of the world, Mr Norris added.
At the beginning of the week Gail Kelly, Westpac’s chief executive, said that they were continuing to experience materially higher funding costs and that interest rates on its loans to customers would rise “over time”.
The RBA surprised financial markets this month by keeping the official cash rate on hold at 4.5 per cent, as it attempted to balance the impacts on inflation from a booming Australian mining sector with continued signs of fragility in the US and Europe.