Wayne Swan Warns Banks Not To Raise Rates Independent Of The Central Bank
Federal Treasurer Wayne Swan has once again warned Australian banks that there is no justification for them to increase their interest rates beyond any increase in official cash rates announced by the central bank when it meets on Tuesday.
Last month the Reserve Bank of Australia chose to hold its benchmark cash rate steady at 4.5 per cent, the third consecutive month it chose to do so after last raising rates in May.
Many economists are now predicting that the central bank will raise rates by 25 basis points when it meets on Tuesday.
Lenders are expected to attempt to protect their profit margins from rising wholesale funding costs by enacting rate hikes on variable mortgage rates by as much as 15 basis points above the hike in official interest rates.
Mr. Swan who admitted that there were indeed issues with long term funding costs of banks, said that still did not justify lenders raising their interest rates independent of the RBA rate hike.
“I don’t think there is any justification whatsoever for any bank to move above the official cash rate decision of the Reserve Bank. Banks are making healthy profits at the moment, their net interest margins are back above what they were before the global financial crisis.” Mr Swan told ABC Radio.
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