Banks say no to big rate cuts

ANZ's chief of Australian operations Brian Hartzer says the bank will seek to pass on as much as it can in any interest rate cuts by the Reserve Bank next week. “We intend to pass on what we can,” said Hartzer “Banks have lost so much faith in each other that the interest rate spread banks are seeking to lend to each other is at a near all-time high,” he told an American Chamber of Commerce in Australia function in Melbourne. Mr Hartzer said there was “unbelievable fear in offshore markets” related to credit, which had made it difficult for the bank to source short term funding. If the difficulties continued, it would flow on to credit lending in Australia. Bank of Queensland chief executive David Liddy yesterday said customers should not expect rates to be cut very much even if the Reserve Bank delivered a big rate cut. “I can only see pricing going up,” he said. “Access to international credit markets is closed, and I doubt that banks will be able to pass on the full cash rate reduction.”

Source: Courier Mail