Banks In Australia Rebuked For Not Passing In Full New Interest Rate

Joe Hockey from Australian Department of the Treasury rebuked several banks in Australia for not implementing the new record-low the interest rate to their customers following RBA’s cut-down on the interest rate on Tuesday, April 5. Of the four big banks, only ANZ has immediately enforced the two percent interest rate to its housing loan customers.

Shortly after RBA Governor Glenn Stevens announced the effectivity of two percent interest rate, ANZ imposed a consequential lower standard variable rate at 5.38 percent. Commonwealth Bank of Australia (CBA), meanwhile, slashed down to 20 basis points its standard variable rate to have a new record of 5.45 percent. CBA’s interest rates on its two-key savings accounts were also lifted between five and 55 basis points to assist retirees and young people who earn money from term deposits to be consistent with RBA’s cut-down on interest rates.

Westpac neither followed suit nor made an announcement whether there will be an adjustment either on its savings or lending rates, while National Australia Bank reduced its rate by 20 basis points.

Hockey warned he will definitely get very angry should Australia’s banks refuse to pass on in full the new interest rate.

“The banks are making very good profit and we need our banks to be profitable. But when the Reserve Bank acts, we expect the banks to also act in full as well,” Hockey told the media.

Choice, a consumer watchdog, blasted CBA, pigeonholing it “cynical” for not imposing the new interest rate in full. Matt Levey, its director, said that while they welcome CBA’s decision in increasing interest rates on deposits, it is not faring bad and so, its “mortgage customers deserve better.” He continued saying CBA is competitive when it comes to deposit transactions particularly, from young savers, without resorting to spinning or playing off between customers and mortgage holders.

Governor Stevens previously hinted RBA is willing to make another cut on the interest rate in helping the government achieve robust economy despite fears of a possible property bubble in Sydney. Earlier, the governor complained the government is giving too much attention to the prices of real estate property in Sydney.

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