Rates heading up says Commbank

12/11/2009

The Commonwealth Bank expects official interest rates to be 4.5 per cent within one year and will not rule out raising rates on its own loan products by more than the RBA’s rate rises. The cash rate is currently set at 3.5 per cent.

Commonwealth Bank CEO Ralph Norris said 4.5 per cent was the RBA’s ‘Goldilocks setting’ – not too hot or not too cold.

"I think it is fair to say that over the passage of the next 12 months, the rate will probably get back to somewhere around 4.5 per cent," Mr Norris said after the bank's annual general meeting in Perth yesterday.

On the issue of Commonwealth Bank lifting interest rates beyond the official rate, Mr Norris said: "I can't rule that out and it is dependent on what the cost of funding is and that's obviously based around cost of retail funding and also the cost of wholesale and international funding. There is no doubt that the cost of funding has continued to rise."

Source: The Australian

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