Australia’s largest and most profitable bank, CBA has refused to rule out interest rate hikes that are out of synch with the Reserve bank of Australia.

CBA chief Ralph Norris in a briefing to the market says the lender was “closely monitoring” the cost of funding on wholesale markets, and the level of competition between the major lenders on their mortgage rates.

Last week the central bank held interest rates steady for a third consecutive month, signalling that they were likely to remain that way until the end of 2010 at the earliest.

The issue here, in regard to out-of-cycle interest rate rises, is that we have not made any decision in regards to that,” Mr Norris said.

“We have worked hard over the 2.5 years of the global financial crisis, as it worked through the system, and we have balanced the interests of our customers and our shareholders.

“When you look at our standard variable rate, we have been the lowest or the second lowest in that period. I say that because we remain competitive in the marketplace.

“We have to monitor our funding costs and our pricing. Obviously, on an ongoing basis, we have to continue to monitor the situation and we will decide what we have to do with our pricing when that becomes necessary.”

Mr. Norris’ comments on the lenders interest rate policy follow closely on the heels of similar comments made on Monday by NAB chief Cameron Clyne, who also refused to rule out interest rate hikes out of step with the central bank.