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Date Published : Wednesday, January 16, 2008
Prime minister Kevin Rudd has indicated for the first time that recent moves by some banks to increase their interest rates will be followed by a rate rise by the Reserve Bank in the near future.
Returning from his summer break, Mr Rudd claimed that the recent decisions by banks to raise the interest rates charged on variable rate home loans would put a number of Australian families at risk of financial turmoil.
According to the Australian, the TD Securities-Melbourne Institute monthly inflation gauge showed that inflation rose by 0.6 per cent in December to its highest level for a year, forcing more pressure on the Treasury, the Reserve Bank and Mr Rudd.
The prime minister told the Herald Sun that families would be affected by changes made by any financial institution, echoing the words of treasurer Wayne Swan earlier this month.
He told the newspaper: "Australian families deserve the best deal they can get from banks and we want to help them get it.
"We are very serious about giving Australian families that are unhappy with their bank more flexibility."
CommSec chief analyst Craig James told the Australian that the changes to the inflation index, rather than the moves of other banks, could force the prime minister's hand.
Mr Rudd added: "To meet the inflation challenge left behind by the previous government and put downward pressure on interest rates we will embark on a new era of fiscal discipline.''
Since the turn of the year, six major financial institutions - including Commonwealth Bank, ANZ and National Australia Bank - have increased their interest rates charged on home loans.
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