Wayne Swan Says Fiscal Stimulus Not Pressuring Interest Rates

Post by NeilMc on September 29, 2009 · Under Australian Economy, Business News, Capital Markets, banking, home loans, interest rates, mortgages · Comment

Federal Treasurer Wayne Swan has dismissed allegations that the Federal Government stimulus package has put upward pressure on Australian interest rates.

On Monday Australian banking major Commonwealth Bank of Australia (CBA) increased interest rates on its fixed rate home loans citing increased funding costs.

CBA raised its fixed interest rates by as much as 50 basis points for a one year term, 30 basis points for a two year term and 15 basis points for home loans with a 3 year maturity.

“It’s a measure of what’s going in international markets as much as anything else,” Mr. Swan said in an interview with ABC radio. Mr. Swan added that lender decisions on fixed interest rates are usually in response to conditions present on international credit markets.

Last month Mr. Swan famously declared that “the era of cheap money was over”, and the government has maintained for some time that global interest rates would not revert back to the extremely low levels experienced internationally prior to the global financial crisis.

Currently Australian interest rates stand at near half century lows of 3.0 per cent. Mr. Swan says he believes that any increase from that level would be reflective of an economic recovery.

“It won’t reflect the impact of the stimulus,” Mr. Swan said.

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