ANZ Chief Says Era Of Cheap Money Over

Post by Sharat on September 7, 2009 · Under Australian Economy, Business News, Capital Markets, Company News, banking, interest rates · Comment 

ANZ chief executive Mike Smith says that signs that the global economy and financial system had stabilised, after more than year of crisis were growing. Mr. Smith also said that the era of cheap money was now over.

“As money is repriced for the risks that were ignored during the economic bubble, the cost of borrowing, even for AA-rated banks like ANZ, is now permanently higher and very different to the overnight cash rate set by the Reserve Bank of Australia,” Mr. Smith said at a speech he gave in Adelaide.

Australia’s largest lenders have set interest rates outside of policy adopted by the Australian central bank, the Reserve Bank of Australia, raising rates as the RBA either loosened monetary policy or held rates stable as a result of higher funding costs.

In his speech, The ANZ chief said he believed that the Australian economy was showing the first signs of recovery, and was optimistic for the outlook going forward, adding that Asia would be the growth driver for the Australian and the global economy for many decades to come.

“And given the trade and investment flows between Australia and New Zealand and Asia, greater engagement with Asia is an essential part of Australia’s long-term growth and for the growth of Australian businesses,” he said.

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